Three of 12 Ventures Funded by Romney-Created Energy Fund Failed
A $17 million, state-backed green-energy fund created during Mitt Romney’s tenure as governor of Massachusetts invested in a dozen companies, three of which have since closed, according to the fund’s manager.
It’s too soon to judge the overall success, though some projects have taken longer than expected to provide a return, William Osborn, a founding partner at the Massachusetts Green Energy Fund LP, said in an interview.
The issue of government support for clean-energy companies has emerged as a campaign theme in the presidential race that has focused on the struggling economy.
Romney, the presumptive Republican presidential candidate, called Solyndra LLC’s collapse after winning a $535 million U.S. loan guarantee a symbol of President Barack Obama’s failed efforts at creating jobs. He spoke during a surprise visit last week to the company’s shuttered factory.
“He certainly supported this stuff back then,” said Osborn.
Obama’s campaign called Romney’s line of attack hypocritical after a solar company he backed as governor filed for bankruptcy last week.
Ryan Williams, a spokesman for the Romney campaign, said in a statement that Romney “has never believed that the government should play venture capitalist.”
Konarka Failure
The green fund managed by Osborn invested in Konarka Technologies Inc., a Lowell, Massachusetts-based company that filed for liquidation and fired about 80 workers last week. Osborn declined to say how much the fund invested in the company.
The fund also backed CTP Hydrogen Inc. in Southborough, Massachusetts, which has since shut down. Osborn said one other company, which he wouldn’t name, also closed.
He said the fund’s performance was typical of venture-capital firms that back early-stage companies.
While the fund is overseen by the state, it was set up to largely operate like a private company with fund managers determining where to invest, so long as the company was based in Massachusetts and qualified as a clean-energy business.
The Massachusetts Green Energy Fund is backed by $15 million from the state, money that came from a separate renewable-energy trust funded through utility fees collected since 1998, before Romney was governor.
Energy Fund
The green-energy fund also has $2 million from private investors, Osborn said. About 75 percent of the total donor commitment has been invested in about a dozen start-up companies, he said.
Other recipients include Protonex Technology Corp. in Southborough and Lilliputian Systems Inc. in Woburn, both fuel-cell companies; Greentech Media Inc., an online news outlet that covers emerging green and clean technologies; and Sustainability Roundtable Inc., a consulting company based in Cambridge.
Romney’s presidential campaign said the state legislature blocked him from using $160 million collected through the utility-bill surcharge to reduce the state’s deficit.
He later took $17 million from the fund for deficit reduction, according to the campaign, in addition to the $15 million set aside for the Massachusetts Green Energy Fund.
At a Jan. 22, 2003, visit to Konarka’s Lowell plant, Romney said the green-energy fund could be a “major economic springboard” for Massachusetts.
Obama Supporter
Osborn said he would probably vote for Obama and records show he gave $300 to his campaign in 2008, according to the Center for Responsible Politics.
Osborn declined to say how many jobs were supported through the fund.
Konarka also received about $6.5 million from other state programs. Of that total, $1.5 million came during the Romney administration, though the state had announced that award in December 2002, prior to his inauguration. The rest came during the administration of Democratic Governor Deval Patrick.
Eric Macaux, senior director for strategy and legal affairs for the Massachusetts Clean Energy Center, which supports renewable-energy efforts in the state, said the $1.5 million loan was converted to stock in the company. Konarka has paid back about $825,000 of its other loans to the state, Macaux said in an interview.
Jim Stergios, who was undersecretary for policy in the executive office of environmental affairs under Romney, said as governor he was always skeptical about using public money to invest in individual companies like a venture capitalist.
“He had no belief whatsoever that the government was any good at this stuff,” Stergios, who is now executive director of the Boston-based Pioneer Institute, which promotes free markets and limited government, said in an interview.
To contact the reporter on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net
To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net
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