By Scott Meacham
Copyright © 2019, The Oklahoman
A few years ago, I attended an executive education program in venture capital at the University of California at Berkeley. The program, which promises to give investors, executives and serious entrepreneurs a window into venture capital and tips on how to succeed with VC firms, delivers as advertised.
There is no better place to gain a full dose of what makes U.S. venture capital tick than in Silicon Valley, at Berkeley, from the leaders and insiders of the world’s hotbed of the VC industry. I learned a lot and met some very influential and interesting educators and VCs, but the thing that has stuck with me the most was something I heard during a three-person panel of younger Silicon Valley venture capitalists.
I had several proof-of-concept deals that were ready to scale and capital. They were the same types of high-tech deals, representing the same kind of risks and opportunities that this panel of VC investors signed up for every day. I asked what it would take to get one of these VC investors to invest in a deal in Oklahoma. This question elicited the first pregnant pause as the panel seemed to struggle with their answer.
Finally, the young VC at the end leveled with us. Look, he said, I’m from Iowa. I understand your problem. I understand what you’re up against — but the reality is that we aren’t getting on a plane and flying from California to Oklahoma or Iowa when we have all the deals we need right here.
Over the past three years or so, things have changed a bit. Steve Case, the founder of AOL, and a group of renegade entrepreneurs (including J.D. Vance, author of “Hillbilly Elegy”) started the nationwide Rise of the Rest Seed Fund (ROTR) committed to investing in seed stage companies located outside silicon Valley, New York City and Boston. From their seven (so far) investment bus tours (five or more cities in five days), ROTR has identified the fastest growing local startups and invested in more than 150 companies.
The ROTR bus hasn’t come to Oklahoma yet; we will welcome them and pull out all the stops when they do. But as terrific as it would be to raise capital from these respected investors, at the end of the day, our shortage of investment capital is greater than any one new source of capital can solve.
The State of the Heartland: Factbook 2018 coproduced by the Walton Family Foundation (WFF) and Brookings Institute reports that in 2017, the 19 center-of-the-country states captured just $3.8 billion of the $74.1 billion in national VC funding. Subtract the half ($1.9 billion) captured by Illinois alone, and that leaves just $1.9 billion for Oklahoma and the other 17 heartland states.
This is a problem we have to solve. Oklahoma cannot succeed economically without new high-growth companies.
As the new administration and state legislature take office, we have to find a way to generate more capital here and to get our companies in front of additional sources of capital in the Midwest as well as the coasts.
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].