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A shot in the arm for venture capital: state governments to the rescue. What is Montana doing?

US venture capital activity tends to be concentrated on the coasts. Over the year, technology centers of gravity have formed in California and Boston where approximately 50 per cent of all venture capital is invested in any given year. Several states in the Midwest/Great Lakes region of the United States have realised the importance of venture capital as an economic driver and introduced legislation to boost the capital under management by over $500m. What do venture funds need to get a slice of this pie? Mahendra Ramsinghani analyses the trends.

For regions across the world, the unparalleled economic success of the Silicon Valley, a 1500 sq. mile footprint in Northern California, has caused immense frustration, envy and plenty of case studies. The region boasts of a world class university – Stanford, great weather all throughout the year and most importantly: Sand Hill Road, the center of the earth for venture capital activity. Bob Metcalfe, father of Ethernet and founder of 3-Com remarked correctly that "Silicon Valley is the only place on Earth not trying to figure out how to become Silicon Valley".

Several case studies have attempted to de-mystify the elements of the raging economic success – only to lead to a simplistic answer. Every region needs a healthy mix of capital, entrepreneurs and research – similar to a food pyramid which suggests that a daily diet should constitute of well balanced proportions of proteins, carbohydrates and fat. So while it’s easy to identify the elements, is it easy to re-create the perfect balance? Of the three elements, creation of venture capital may seem the easiest for the powers that be – the other two elements of research and entrepreneurial talent are fuzzy at best and cannot be easily identified, managed and controlled.

Source: Michigan Economic Development Corporation. Mahendra Ramsinghani, director of venture capital initiatives

Full Story: http://www.altassets.com/casefor/countries/2005/nz7895.php

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Midwest pulls out all stops for start-ups- $500 million in new private and public money has been earmarked for venture investing http://www.matr.net/article-7312.html

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