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Lawrence among best venture capital markets per capita

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I don’t know about your neighborhood on the Fourth of July, but in mine last night there were plenty of young venture capitalists on display: People willing to burn their money in hopes for a big bang in return.

Venture capitalists — the high-risk investors who provide start-up money to promising young companies — have long been a source of conversation and concern in Lawrence. The conversation has been: Where can I find them? The concern has been: There aren’t enough of them in the Midwest to make Lawrence a major player in the competitive bioscience arena.

Well, there’s a new study out that shows Lawrence may be doing better than people thought when it comes to at least one measure of venture capital. Lawrence has the sixth highest level of venture capital investment in America, when measured on a per capita basis.

Guru demographer Richard Florida — who lectures frequently on the power of the creative class — has crunched the numbers and found Lawrence is part of a trend of smaller communities connected to universities that are doing well in the venture capital arena.

Florida calculated Lawrence had $40.8 million in venture capital deals per 100,000 people in 2012. It put Lawrence in some great company. The top five were:

  1. San Jose, Calif., a.k.a. Silicon Valley: $216.9 million
  2. San Francisco: $159.1 million
  3. Boulder, Colo.: $86.9 million
  4. Boston: $68.1million
  5. Santa Barbara, Calif.: $59.1 million

Lawrence’s metro population — in other words, Douglas County’s population — is just a little more than 100,000 people. So, in real numbers, Douglas County companies attracted a little more than $40 million in venture capital investments in 2012. Think about that for a minute: $40 million in largely outside money came flowing into Lawrence’s economy because of start-up companies.

For whatever reason, area companies don’t do a lot to announce their venture capital successes, so I don’t know what companies attracted the cash in 2012. But in recent years, we have talked quite a bit about rising stars such as Deciphera Pharmaceuticals, drug particle company CritiTech, and the more than 30 companies ranging from animal health firms to e-commerce companies that are affiliated with Bioscience and Technology Business Center at KU.

There is no doubt that this new list is a good one for Lawrence to land on. It helps tell the story that local bioscience officials have been working to tell: You can have success in raising funds in the Heartland. But you could also read too much into this ranking as well. At the end of the day, when people think about hot venture capital markets, they think about real dollars, not per capita dollars.

A separate ranking by Florida shows how much work Lawrence has to do to crack the top 20 markets of overall venture capital activity.

Obviously, setting our sights on the Silicon Valley or top-ranked San Francisco isn’t going to be too productive. San Jose and San Francisco had about $10.7 billion in venture capital investments in 2012, accounting for about 40 percent of all the venture capital activity in the country.

More instructive is to look at some other college communities. Austin ranked No. 8 at $626 million, Boulder ranked No. 14 at $256 million, Raleigh, N.C. ranked No. 18 at $184 million and Provo, Utah ranked No. 20 at $162 million.

But the good news is, when you look at this study, Florida has created a blob map of venture capital markets. Lawrence shows up as a speck on it. And a speck is a start.

Hopefully, though, people aren’t counting on my neighbors to be the next wave of venture capitalists. After what I saw last night, they have to be broke.

Comments

scaramouchepart2 1 year, 3 months ago

Lawrence has one incubator and that is the bioscience. As for ventures for unknown start ups, No way. Ii am glad Lawrence finally got on the animal acience corridor between Manhattan and Columbia. Graduates coming out of KU tend to go to Chicago for start up friendly fees where there are business incubators or farther away. This has been a major draw back for Lawrence. Vermont has some great ways to help communities grow through programs that support young adults partner with business people getting ready to retire. Only if you are interested in a narrow band of pharmaceuticals and sciences do people have a chance. There is far more we can do that everyone else is doing before Lawrence can really be considered a great place to start a business. It is not about the number of people vs Capitol out lay it is about the number of capital opportunities period. The chamber has done a great job under the new CEO Greg Williams and I expect to see more. A brick and mortar tech school, a report that just barely sctraches the surface of looking at our job skills and why so many leave town to go to work, and non government partners in funding sources for economic development. The city and KsDot considering a regional transportation system is another good start, but this area of the country is very far behind much of the rest of the country. Not ready for any back slapping yet.

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vuduchyld 1 year, 3 months ago

I'm much more inclined to believe the "separate ranking" link.

It's tough to trace private money reliably. Even if the original link is somehow accurate, it could be a result of one really big deal. Could also be a one year aberration.

As of now, we can't identify even ONE local success or ONE job created with something like $40MM in outside money allegedly pumped into our fair city.

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