More venture capital needed to attract business

Depression-era gangster Willie Sutton, when asked why he robbed banks, quipped: "Because that's where the money is."

Of course, the bottom line in business is well, the bottom line. In a capitalist society, financial success has always been a primary motivating factor. In addition, money also serves as a yardstick by which success or failure is often measured.

But when we turn to entrepreneurial development, we are often dealing with a completely different mind-set. True, many entrepreneurs are motivated by the potential of wealth and financial security. But an even stronger driving force can be found in the feeling of independence and the thrill of making an idea work against seemingly insurmountable odds.

Missouri certainly has its share of success stories in the entrepreneurial realm. Ewing Kauffman started Marion Labs by selling pills out of the trunk of his car. Joyce Hall got his start by selling picture postcards out of a shoebox and built what is now the world's largest greeting card company: Hallmark Cards. And J.C. Penney of Hamilton took a tiny retail store and, with a set of new ideas and a lot of determination, built a retail empire.

And even though Missouri continues to nurture a number of entrepreneurial enterprises, we don't seem to be getting our fair share. The hot spots for high-tech start-ups seem to be in such places a Silicon Valley or Boston or Seattle.

Why? The answer is the same as what Willie Sutton discovered: It's where the money is.

Specifically we're talking about venture capital, the rather speculative type of financing required for businesses that are beyond the start-up phase, but are not well enough established to qualify for conventional loans. A 1996 venture-capital study by Price Waterhouse identified venture-capital resources of $249 million in the Denver area, and more than $788 million in Boston. By contrast, $20 million was identified in St. Louis.

Since then Missouri has done a little better job in the venture-capital arena. A study earlier this year by the Progressive Policy Institute ranked Missouri a respectable 16th in terms of available venture-capital funding, and the addition of new state programs has helped bolster the supply of financial resources for early-stage businesses.

In August, Gov. Mel Carnahan held the Governor's Roundtable on Venture Capital Formation, a discussion group involving experts from the fields of business, finance, education, and technology. The meeting was designed to discuss Missouri's logical next step to attract, retain and increase technology-oriented enterprises.

The purpose of this gathering was to start an active discussion on what we can do, collectively, to encourage the growth and development of these early-stage, high-growth companies that are quickly becoming the foundation for the national economy. In recent years, we've adopted some good tools: the Certified Capital Company Program (CapCo) has helped attract $140 million in private investment for venture-capital funds[[In-content Ad]]