By Jared Weinstein

Dear Governor Ivey and Members of the Board of the Innovation Corporation:

As an advisor to the Alabama Innovation Commission, I was discouraged to read a statement from a government spokesperson that Alabama doesn’t plan to support Birmingham Southern College (BSC). A decision to reject Daniel Coleman and his investment plan for Alabama’s only nationally ranked liberal arts college is a missed opportunity to not only to drive innovation and grow and retain top talent in Alabama, but to shift external perceptions about our commitment to innovation in Alabama.

As a former public servant, I recognize the many competing priorities that you and the state face and know you hear many perspectives in support of many different causes. I thought I’d share a perhaps new perspective on BSC’s President Daniel Coleman and his effort to sustain and grow BSC in hopes that it helps you make decisions as this process continues to unfold.

As a venture capitalist in New York for the last decade and in government in Washington, D.C. prior to that, I have been asked by Alabama state officials, local investment firms, entrepreneurs and organizations including the Alabama Innovation Commission: “Why don’t venture capital dollars, innovative companies, and top talent contemplate the state as a place to invest and call home?” It is a good question, but from my perspective, often assumes the problem lies with those outside the state. The problem is not that people and organizations don’t consider Alabama. The problem is that Alabama doesn’t have a sufficient track record of supporting innovation and top-tier talent and unless we build that record, we will continue to be dismissed by the most successful innovators and capital allocators across the country.

Betting on winners

To be clear, I love Alabama. I was raised here and although I’ve spent much of my adult life away from the state, I’ve constantly had Alabama on my radar. I’ve been working from afar to establish best-in-class programs and bring investments to Alabama across areas including education, entrepreneurship, computer science, early childhood development, and innovative government, and I’m grateful for the state’s support of these efforts; most importantly, I recently moved back here which I believe is my clearest commitment to the future of Alabama yet. For us to be a state that attracts venture capital dollars and talent, retains our best homegrown talent, and participates in the modern innovation economy, we need to start betting on people who have a track record of success and are willing to take big, impassioned risks on ideas that are bigger than themselves, especially when those ideas are aligned with strategic priorities of the state. That is who venture capitalists and truly innovative entities bet on.

Venture capital investors receive hundreds if not thousands of business pitches each year. Those pitches have some of the most compelling ideas and frankly some of the most harebrained ones as well. The Innovation Corporation will receive similar pitches as it seeks to grant money to state-based innovative companies and entrepreneurs. What venture investors will tell you is that while the idea matters, what matters infinitely more, and what will drive the most outsized return on an investment is execution of the idea which is dependent on the person leading. As Steve Jobs said, “To me, ideas are worth nothing unless executed. They are just a multiplier. Execution is worth millions.”

A clear track record

That brings me to Daniel Coleman. Daniel is the kind of talent that venture capital would bet on without pause. He has a clear track record of tremendous business success and effective leadership in both the public and private sectors. He is a straight-shooter, tenaciously hard working, a trusted steward of capital, extremely intelligent, and has worked alongside and led top talent around the country. He speaks truth to power, and he knows that challenging and re-thinking systems and processes is necessary to improve them. While his style may not optimize for making friends, he is unwavering – as all great entrepreneurs are – in his effort to do what he believes is right. Alabama is fortunate to have a leader of this caliber fighting so hard for something that will benefit the state.

His commitment to Alabama is evident; after a career leading some of the most innovative firms in financial services, Daniel returned home to raise his family and play a leading role in driving Alabama forward. He co-chaired Mayor Woodfin’s financial advisory committee to help a city mired in debt return to financial stability. He then took the lead at a college he had no previous connection to in an attempt to help Alabama retain one of its leading educational institutions that was victim to poor financial management by previous leadership. If I were in your shoes and trying to assess Daniel Coleman’s ability to deliver on what he is proposing to the state, I would diligence this established track record of business success, this ability to lead in both the public and private sectors, and the quality of people who have worked for him and can speak to his competencies, character, and moral compass.

I would then think about the business idea Daniel is pursuing – both its economic impact and its strategic importance to Alabama. In this case, Daniel is seeking $30 million from the state to maintain and grow a “business” that currently returns $97.2 million annually in direct benefits to the state, as well as hundreds of graduates each year, many of whom have grown to become prominent figures in business, public service, and philanthropy. Over a five year period, if Alabama invests $30 million in Daniel Coleman and BSC, the state will realize almost $500 million in direct economic benefit. Beyond that, BSC alumni contribute over $200 million per year to the state.

Venture capitalists often invest in businesses that have yet to generate returns. That is not the case with BSC; significant returns have already accrued to Alabama for over a century and with this investment from the state, would continue to do so for years to come. Under Daniel’s leadership, I believe the economic and strategic returns could be significantly greater going forward. That feels like a prudent investment to me.

A smart investment

Through the governor’s leadership and our shared work on the Innovation Commission, the state has now set up the Innovation Corporation, a vehicle that will deploy tens of millions of dollars in state public funding to private businesses and entrepreneurs across Alabama. I applaud your leadership on this effort. How does public investment in a leading college with clear impact for the state differ from our important work in supporting private businesses with public funding through the Innovation Corporation? I know we’d all be ecstatic if each of the Innovation Corporation grantees ultimately returned $97.2 million (per year!) in economic impact for Alabama.

I, of course, appreciate that state dollars are not venture capital dollars. I also am grateful for the governor’s stewardship over the state’s finances. Financial support for BSC would continue that stewardship and be a sound investment in Alabama’s future and innovation – one we all share a vision for. Daniel Coleman is the right person to execute on that vision and the state should support him in doing so as Alabama will reap more benefits than anyone else. You could even consider certain conditions to your investment in Birmingham-Southern such as Daniel’s continued leadership, more majors or classes offered that are of strategic importance to Alabama like data science and engineering, and the requirement of additional outside dollars to ensure BSC is sustainable long term.

Some have suggested that using state dollars to support BSC would be akin to a “bailout.” This is not a bailout. A bailout is wasting good money on a futile attempt to recoup losses. We don’t do that in venture capital and the state shouldn’t either; when an investment has no path forward, we stop investing. And if Birmingham Southern didn’t have a path forward, I wouldn’t recommend investing either.

An investment in Daniel Coleman and his plan for BSC not only represents Alabama’s ability to make smart investments that we know have economically beneficial outcomes, but also represents our state’s ability to identify and support innovation and the type of leaders who can bring about that innovation. I remain grateful and honored to have been asked by you to advise the Innovation Commission. To that end, if we are serious about establishing Alabama as a state that attracts and retains top talent and celebrates innovation, an investment in Daniel Coleman and BSC is one we must make.

Thank you for your continued service to our state.

Jared Weinstein was an advisory council member of the Alabama Innovation Commission which led to the establishment of the Innovation Corporation. He’s an Alabama native and spent time in government in Washington and as a venture capital investor in New York.