Startup Communities: Building an Entrepreneurial Ecosystem in Your City

COMPLAINING ABOUT CAPITAL

I’ve been an entrepreneur and investor for the past 27 years. I’ve lived and invested in Dallas, Boston, and Boulder and have invested in companies in many other cities throughout the United States including Seattle; San Francisco; Los Angeles; San Diego; Chicago; Austin; Portland; Denver; Washington, DC; Atlanta; New York; New Jersey; and some I can’t remember. Over and over I hear one thing from entrepreneurs: “There is not enough capital here.”

My message is the same for entrepreneurs—let it go. There will always be an imbalance between supply of capital and demand for capital. The whole idea of “enough capital” is nonsensical, and complaining about it doesn’t actually impact it.

Many startup communities have specific initiatives to attract more capital to their area. Some of these are government led, such as state funds-of-funds to invest in VC funds that commit to making investments in a specific region. Others are university-sponsored VC funds or university startup grant programs. Although some of these programs are effective and have impact on funding new companies, they don’t actually solve the fundamental supply/demand imbalance.

Boulder is a case in point of this. When I moved to Boulder in the mid-1990s, many entrepreneurs complained that there wasn’t enough capital here and that was one of the reasons they had difficulty getting funding. In the late 1990s, there were a large number of startups competing for the capital that magically scaled ...