Texas Ends Rick Perry's Controversial Startup Fund

by | June 8, 2015

By Aman Batheja

Shortly before former Gov. Rick Perry officially launched his second presidential campaign in Dallas on Thursday morning, his successor ended a long-criticized initiative from Perry’s tenure.

Flanked by the heads of the state’s flagship public universities at the University of Texas at Austin, Gov. Greg Abbott signed Senate Bill 632, which eliminates a controversial startup investment fund long touted by Perry and directs much of its money to a new researcher recruitment effort.

“Texas as a state is going to have the best and brightest campuses in this country,” Abbott said before signing the bill.

Perry launched the Emerging Technology Fund in 2005 to provide state venture capital to high-tech startups. While Perry has cited the fund as part of his record of economic development as governor, reports of unfulfilled job claims and bankruptcies of companies that had received TEF grants prompted years of criticism. In 2011, a scathing report by the state auditor found the fund lacked sufficient guidelines for “transparency and accountability.” Abbott announced in January his interest in eliminating it entirely.

Along with ending the fund, SB 632 establishes the Governor’s University Research Initiative, a new fund the Legislature created at Abbott’s request to attract top researchers to public universities. Lawmakers agreed to put $40 million of the Emerging Technology Fund’s $102 million balance in the new fund, and $45 million in the Texas Enterprise Fund, another economic development fund started by Perry.

“At a time when other states are cutting back, trimming their budgets, limiting what their universities have access to, limiting the ability for their researchers to expand, at that very same time, the state of Texas is providing those resources to researchers that are already here as well as providing a magnet to researchers and the brightest minds around the entire globe to come to the state of Texas,” Abbott said.

Abbott told reporters Wednesday that he plans to travel the country and the world to promote Texas to businesses as well persuade established researchers to relocate to Texas universities.

UT Chancellor William McRaven said he was hopeful the increased research funding approved by lawmakers this session would lead to UT being able to make impressive new hires across a wide range of fields.

“We will end disease. We will discover new frontiers. We will create a better tomorrow,” McRaven said in a statement. “We need only to make the right investment in our future. Gov. Abbott and the Texas Legislature are making that investment today.”

Disclosure: The University of Texas at Austin is a corporate sponsor of The Texas Tribune.

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