From the latest E&Y/VentureOne data on third-quarter venture capital activity, there are only five U.S. states in which there has been no venture capital invested so far in 2005: Kansas, Montana, Nebraska, North Dakota and South Dakota. Yes, some will use that information to either mock the five as fly-over states, or to suggest that maybe they’re the best place to relocate if you want to escape all the over-eager VCs out there, but I’d like to make a different and somewhat more serious point.
Back in the 1960s when venture capital really began to emerge who would have expected that there would be venture investments in 45 of the 50 U.S. states (including Alaska and Hawaii) by 2005? That is remarkable (near-)ubiquity for a new and risky asset class in a short few decades.
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So are you mocking? Just trying to understand your intent. While there has been no institutional VC activity in Kansas in 2005, there certainly have been robust venture investments through out this region. Your entry would imply otherwise.
One of the problems with the E&Y data is that it only tracks institutional private equity, not all private equity investment. My venture firm, Open Prairie Equity Partners, has recently expanded to open a Kansas office because of the strong entrepreneurial environment through out the region. I hesitate to highlight this issue because of the inherent advantage we have as an institutional investor in a region with little institutional competition.
Put another way – while the drunk at the punch bowl crowd fight to overprice another ‘Web 2.0’ business, we in the Midwest will continue to participate in high growth companies, at rational prices, with rational uses of venture capital.
By the way, you may know Joel Wiggins, the former director of the Austin Technology Incubator. Joel chose to move to Kansas to run a business incubator because of these opportunities.
Certainly Sprint, Garmin, Koch Industries, Hallmark, H.R. Block, EuroNet, Cerner Corp would be some of the prized examples of entrepreneurs. Additionally, Perceptive Software, Handmark, kozoru, Punch Software, CyDex, FishNet Securities have also registered substantial venture investments over the last year. In fact, since 2003, $50M of outside institutional venture capital has been invested in Kansas.
Fortunately, and to my previous point, only $1M of that investment was sourced from within Kansas. I mock the irrational exuberance that is starting to reemerge elsewhere.