During the late 90's craze to label every region with a Silicon prefix, there were at least 10 states claiming to be in the top 5 for venture capital raised. Terrified of looking connected to the “old economy”, economic development officials from Utah to New York were anxious to tell people what venture capitalists were doing in their state.
While the recession of the early 2000s cooled the “Silicon Prairie, Forest, Alley, Dominion, Beach, Mountain” nonsense, regions still saw attachments to venture capital as essential for marketing themselves, as well as for financing startups that promised to employ hundreds of people. However, most of these efforts created more hype than jobs, and the 100 person startup remained a rounding error compared to the 18,000 people working in area hospitals.
Venture capital has gone into an even further decline the last few years, and many of the issues surrounding limited funds are not tied to the recession, but changes in the technology industry, specifically:
* Startups seeking funding for operating costs, not capital expenditures
* Poor performance of “Green Technology” investments
* More people implementing technology than creating it – a key consideration for economic development
...stay tuned for Part 2
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