Musings on Entrepreneurship and Innovation
Sunday, May 23, 2004Native Sons and Daughters
For decades, many towns and small cities in the Rocky Mountain West were net exporters of young, bright, ambitious people. Over the last few years, however, some of these native sons and daughters have reconnected with their hometowns. An encouraging consequence is the acceleration of the development of regional venture capital networks.
Last week in Boise, Idaho, I was introduced to Len Jordan of Seattle's Frazier Technology Ventures. A native Boisean, Len moved to Portland, Oregon after college to join a series of technology startups. Ultimately, he became part of the senior management of RealNetworks in Seattle. Subsequently, Len joined Frazier, one of the Pacific Northwest's leading venture capital firms. Since joining the firm, Len has opened a small office in Boise and visits the area every few weeks. Although the deal flow in Idaho and Western Montana is a trickle compared to that found in Seattle, the competition for deals isn't as intense; and Len is looking to back the next billion dollar business in Idaho (home of Albertson's and Micron, for example).
The risk that defines early stage ventures is hard to box contractually. Not surprisingly, there tends to be a relatively high dependence on the part of investors upon networks of personal trust. Consequently, venture capital tends to be parochial [1]. Nevertheless, the Internet, the regional jet, and the broadening of entrepreneurial opportunity is changing the landscape. In addition to native sons such as Jordan, committed transplants such as Mark Solon at Boise-based Highway 12 Ventures and Trevor Loy at Flywheel Ventures in Santa Fe are building upon their established ties to VC on either coast. Furthermore, changes in the heartlands of venture capital -- Silicon Valley and Boston -- are leading to extroverted, collaborative investment strategies by the likes of Garage Technology Ventures and Village Ventures.
A few short years ago, the notion of a vibrant network of venture capital in the Rockies outside of Denver-Boulder was something of a pipe dream. That's no longer true. Repatriates and immigrants to the region are quickly cementing the social bonds necessary for such a network to grow. As usual, the interplay between technology and relationships is the key.
[1] The adventurous might want to read a couple of academic articles on optimal parochialism (PDF) and the geography of syndication networks (PDF).
