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:
- San Jose, Calif., a.k.a. Silicon Valley: $216.9 million
- San Francisco: $159.1 million
- Boulder, Colo.: $86.9 million
- Boston: $68.1million
- 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.