Venture capital may be less accessible for investors in Colorado and other locations outside of the Silicon Valley, according to one report. It found that almost half of every dollar of venture capital goes to Silicon Valley. Los Angeles, New York and Boston receive almost a third of all investments, so there is less than 25 cents of each dollar remaining for the rest of the country. In 2015, five states didn’t receive any venture capital investments.
Entrepreneurs report a geographical bias for the coastal cities, and an individual in St. Louis was advised to say he was moving to San Francisco. If venture capital investors expanded their geography, many smaller communities throughout the country could see enormous economic benefits.
Five of the 10 largest companies in the country were started with the help of venture capital investments. More than a third of employees at publicly funded companies founded in the last 40 years have jobs that were originally fueled by venture capital investments. Each year, startups add millions of jobs to the economy.
The State Small Business Credit Initiative has filled in a part of the gap in places where venture capital investors are hesitant to put their money, but it is a small amount in comparison. In 2014, the SSBCI invested half a billion while annual venture capital investments average around $59 billion a year.
Another option for some small businesses in places like Colorado that may be less attractive to some investors is to seek out an attorney who works with venture capital investors. Being an entrepreneur does not necessarily make someone a financial expert, so a lawyer might be able to provide valuable investment advice. An attorney may also be able to assist with drafting business plans, finding angel investors and successfully closing the deal.