Tuesday, July 19, 2011

Another reason not to let government "partner" with business

A company desiring to make electric cars has just gone bankrupt in Salinas, California.  Why?  "Not enough capital," the former CEO says, but let's be real; the federal government, the state of California, and the city of Salinas all poured in a lot of capital to make this work.  Moreover, all these levels of government were aiming to subsidize these vehicles; you could pretty much buy batteries and motors off the shelf and have a local welder "sweat" these things together and make a go of it. 

So what went wrong?  Well, if he couldn't raise capital despite over $700k in government money helping things along, that means one thing, and one thing only; his business plan was really, really, really bad, and private investors wouldn't touch it.  It's not beyond guessing that not even the SBA would touch them--and given that entrepreneurs are warned against SBA loans if they can get other financing, this is saying something.

Suffice it to say that California and Salinas taxpayers have yet another reason to give a one finger salute to their elected officials for awarding large amounts of capital to a company arguably without a business plan beyond hype.  Hopefully they will in the next election.


Gino said...

CA (meaning me) gave him some money but i'm sure arnold got a cut of the tranfer fee.

the truth of this ex-gov is not completely out yet...

Bike Bubba said...

You saying that the state where you live is like the state where you were born? Will California governors soon get the Illinois solution; one term in office followed by one in jail?

We can only hope, and I bet Maria would melt down the key for you, too. :^)