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Does venture capital investing create jobs in Denver, elsewhere?

After receiving a $10 million investment, EverFi, a district based education startup company is planning on hiring up to a 100 employees around the country, and hopefully in the Denver area as well within the next 18 months. The $10 million investment was from a group of financiers with some of the biggest names in consumer technology, including Amazon's chief executive Jeff Bezos, Twitter co-founder Evan Williams and Google's Chairman Eric Schmidt.

EverFi offers online college and high school tutorials on subjects including financial literacy, cyberbullying and the consumption of alcohol. Some economists and business leaders contend that venture capital investment, such as that received by EverFi will indeed drive job growth. Others contend the new jobs may not be sustainable if the new startups do not generate enough revenue to support the job growth long-term. It is possible many of these new jobs are the first to go when the venture capital funds run out.

Up to 50,000 job postings each year can be seen on StartUpHire, a job search website for venture capital-backed companies, according to the company's co-founder, Steve Frederick, who is also an investor at Grotech Ventures. And, he says, that is just a fraction of the jobs created by startups. Once a startup company grows and becomes better established it becomes a real engine of economic growth at more and more significant levels. And once a company offers an IPO it will continue to grow adding more jobs to its operations.

Often the largest chunk of the funding goes towards salaries, said Frederick so there is evidence that venture capital does indeed spur long-term job growth. And even if these new jobs are not considered ultimately stable, they are just as stable as those at larger, established companies as massive layoffs make headlines almost daily. Finding the right venture capital can be the real challenge, which is where many of the newer startups need help.

Source: The Washington Post, "At start-ups such as Everfi, investments often precede hiring," Steven Overly, Aug. 19, 2012

Our law firm practices business law, including business planning and startup assistance as well as venture capital. Visit our Denver, Colorado, venture capital page to learn more.

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