Grounded in Experience. Motivated to Help

Venture capital is distributed unevenly geographically

On Behalf of | Mar 1, 2017 | Business Law |

People in Ohio who want to start a small business may have a harder time finding venture capital investors than if they lived in large coastal cities. A report found that for every dollar spent by venture capitalists, 46 cents of it goes to Silicon Valley. Boston, New York and Los Angeles receive 31 cents, leaving only 23 cents remaining to be disbursed to the rest of the country. Mississippi, Alaska, Hawaii, Wyoming and West Virginia received no venture capital funding in 2015. Furthermore, tech firms are two times more likely to receive funding than those that are in another industry.

If venture capital investors spread their funds around, the result could be a considerable improvement in the economy in many other areas of the country. Many companies that have become successful in the past few decades were funded by venture capital investments. Between the years 1980 and 2010, approximately 2.9 million jobs were created annually by startups.

Unfortunately, entrepreneurs in other communities often find themselves overshadowed by those who live in more desirable geographic locations. One entrepreneur reported pressure to say he was moving to the West Coast even if it was not true. The State Small Business Credit Initiative is a government program that has allocated funds more fairly but represents only a fraction of venture capital investment.

In addition to raising funds, entrepreneurs may have a number of other issues with which they might need assistance. A person who is starting an enterprise for the first time may be unfamiliar with what it entails, but even experienced company owners may not be aware of changes to business laws. An attorney may assist someone with planning and forming a business including choosing the right corporate structure.