By Scott Meacham
Copyright © 2015, The Oklahoma Publishing Co.
If I discovered a magic lamp that would give me three wishes, one of them would be for Oklahoma to do what it takes to increase the amount of venture capital invested in technology startups in this state.
Of course, the problem with wishes is that they are just that. You can’t rub a lamp to make venture capital magically appear and start writing checks.
But there are steps our state can take and investments we can make, things that other “flyover” states in the interior of our country are doing to attract venture capital.
If Oklahoma needs a rallying cry, here’s one from the National Venture Capital Association/Pricewaterhouse Coopers: Oklahoma’s results in terms of the percentage of venture capital deals and the amount of venture capital invested in Oklahoma, although showing slight improvement the last couple of years, remains near the bottom of all states.
While we remain the smallest of blips, venture capital funding for early stage companies in general has increased 150 percent across the country.
But what should really make Oklahoma take notice is that while half the deals and 65 percent of the dollars from venture capital are concentrated in California and New York, there’s evidence that venture capital is becoming available to entrepreneurs in more regions than ever.
In a February article in Harvard Business Review, Ian Hathaway reports that while a “handful of well-known cities continued to dominate, a nontrivial amount of catch-up by other cities had occurred.”
Hathaway aggregated 381 early venture capital high-tech deals for each U.S. metro area from the last five years and found that two-thirds of U.S. metro areas received no first-round venture deals in 2009. Five years later that figure improved by nearly a third.
And as Hathaway observes, as more metros move from zero early stage venture capital deals to one, the next expansion is from one venture capital deal to a few, and a few to many.
So what does it take for venture capital to come into a region and write checks? There have to be a number of early stage investment-ready deals.
That kind of deal flow only comes about from the commitment and investment of dollars and resources from all the constituencies that stand to benefit — the business community, universities and research institutions that develop future entrepreneurs and spin-out technologies, regional angel investors, and especially from the state which funds mission-driven organizations like OCAST and i2E.
There are plenty of effective models for attracting VC investment. It’s happening in other states.
We know what to do and how to do it here. Instead of cutting back state investment, we should be doubling down.
And it’s not just the state. It’s all of us. We need to team up to make entrepreneurial job creation in Oklahoma less like pushing a boulder and more like pushing a dream.
Scott Meacham is president and CEO of i2E Inc., a nonprofit corporation that mentors many of the state’s technology-based startup companies. i2E receives state appropriations from the Oklahoma Center for the Advancement of Science and Technology. Contact Meacham at [email protected]
Did You Know? Early stage VC deals are booming. While 2013- 2014 was a bit of a plateau, first fundings increased 150 percent between 2009 and 2012.