State budget withholding may put Efactory, JVIC in jeopardy

The fate of Missouri State University's Efactory business incubator and Jordan Valley Innovation Center may be on the line after budget withholdings by Gov. Mike Parson, officials said this morning.

At the crux of the issue is the Efactory and JVIC's appropriation from the Missouri Technology Corp., which was defunded through Parson's order earlier this month amid the coronavirus pandemic. The withholding of roughly $2.9 million is the MTC's entire budget, according to an Efactory news release, and now the state is calling for the funds already expended to be paid back, according to media reports.

"This is concerning not only for our programs and our successful operations, but sets a very dangerous precedent for all publicly funded entities. Historically, budget withholds have been forward-looking only," Efactory and JVIC officials said in the release. "We know these are tough times. We were fully expecting a withhold of future funds. The situation we find ourselves in now exceeds the definition of a withhold."

The Efactory and JVIC's fiscal 2020 MTC appropriation was $161,539, which was matched locally via the organizations' operational fund.

Efactory officials said future withholdings in the third and fourth quarters would be sustainable, but having to pay back first- and second-quarter funds that already have been spent "would be devastating to our programs,” according to the release.

"To terminally defund entrepreneurship and innovation efforts is a fatal misstep on behalf of our state government. It’s a move that our community will likely not recover from," the release reads.

The Efactory's funding also includes a $350,000 Missouri Building Entrepreneurial Capacity Program grant. The organization is currently in year two of the three-year grant, according to the release.

Last year, the Efactory announced a $1.25 million grant from the federal government.

The Efactory ranked No. 1 on Springfield Business Journal’s 2019 list of the area’s largest business incubators. The organization reported 30 tenants, 930 total startups assisted and 1,570 jobs created.