Post by Sapphire Capital on Dec 20, 2008 23:41:49 GMT 4
Financing the Next Silicon Valley
Darian M. Ibrahim
University of Wisconsin Law School
September 22, 2008
Univ. of Wisconsin Legal Studies Research Paper No. 1065
Abstract:
Silicon Valley's success has led other regions to attempt their own high-tech transformations, yet most imitators have failed. Entrepreneurs may be in short supply in these "non-tech" regions, but some non-tech regions are home to high-quality entrepreneurs who relocate to Silicon Valley due to a lack of local financing for their start-ups. These regions must provide local finance to prevent entrepreneurial relocation and reap spillover benefits for their communities. This Article compares three possible sources of entrepreneurial finance for non-tech regions: private venture capital, state-sponsored venture capital, and angel investor groups. Private venture capital is the most prominent source of entrepreneurial finance but is concentrated in existing tech regions and directed to later-stage start-ups. State-sponsored venture capital programs correct these deficiencies but create new ones, namely a lack of market incentives and relevant expertise in technology funding. A third source of entrepreneurial finance - the angel investor group - does not suffer from these drawbacks and therefore, while only a decade old, may prove to be the best alternative for financing the next Silicon Valley.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1272957_code517200.pdf?abstractid=1272957&mirid=2
Darian M. Ibrahim
University of Wisconsin Law School
September 22, 2008
Univ. of Wisconsin Legal Studies Research Paper No. 1065
Abstract:
Silicon Valley's success has led other regions to attempt their own high-tech transformations, yet most imitators have failed. Entrepreneurs may be in short supply in these "non-tech" regions, but some non-tech regions are home to high-quality entrepreneurs who relocate to Silicon Valley due to a lack of local financing for their start-ups. These regions must provide local finance to prevent entrepreneurial relocation and reap spillover benefits for their communities. This Article compares three possible sources of entrepreneurial finance for non-tech regions: private venture capital, state-sponsored venture capital, and angel investor groups. Private venture capital is the most prominent source of entrepreneurial finance but is concentrated in existing tech regions and directed to later-stage start-ups. State-sponsored venture capital programs correct these deficiencies but create new ones, namely a lack of market incentives and relevant expertise in technology funding. A third source of entrepreneurial finance - the angel investor group - does not suffer from these drawbacks and therefore, while only a decade old, may prove to be the best alternative for financing the next Silicon Valley.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1272957_code517200.pdf?abstractid=1272957&mirid=2