The Top 10 States In Six Categories

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CAPITAL RESOURCES

1. New York

2. California

3. Massachusetts

4. Connecticut

5. Minnesota

6. Texas

7. Pennsylvania

8. Alabama

9. New Jersey

10. Mississippi

One of the biggest headaches every entrepreneur faces is the task of raising seed capital. And if his company not only survives but grows, he often must raise second and third phase financing as well. This ranking measures the availability of that money by gauging the "looseness" or "tightness" of investment capital in the 50 states. In which states do the money sources seem most willing to invest in young and growing companies?

Not surprisingly, the top 10 include most of the acknowledged money centers in this country. The only ones conspicuous in their absence are illinois and Florida. Illinois's failure to make the top 10 list reflects an extremely low Small Business Investment Company activity and Industrial Revenue Bond issuance rate ($4 per capita vs. the national average of $40 per capita). Florida, which ranks No. 47, lacks a loan program tailored to small business and satisfactory IRB issuance. Florida is further hindered by a conservative banking community.

New York achieved the No. 1 position through an extremely aggressive banking community as well as a preponderance of venture capitalists and other investors willing to risk participation in startups and young companies. California also boasts an aggressive banking community, high SBIC activity, and, like New York, a large number of investors willing to take risks.

Massachusetts, Connecticut, and Minnesota all have aggressive banking communities and active SBIC programs. Connecticut, in fact, is the national leader in SBIC activity. Minnesota and Massachusetts possess very active IRB programs as well.

Pennsylvania and Alabama are hobbled by a lack of small business loan programs. But they both managed to make the top 10, the former by claiming the nation's most active IRB authority and the latter by registering the second most active SBIC program. Mississippi overcame the handicap of a cautious banking community to earn a top slot by promoting the second most active IRB authority along with a well-run SBIC program.

Anchoring the opposite end of the spectrum, West Virginia finds itself in the company of Nevada, Nebraska, Kansas, Alaska, and Hawaii. Geographically a rather diverse crew, these states can all be characterized as having average to nonexistent IRB sales and SBICs. All except Alaska are also the victims of banking communities that are recalcitrant when it comes to lending.

ENERGY COSTS

1. Hawaii

2. Alaska

3. Washington

4. Montana

5. Oregon

6. Wyoming

7. Idaho

8. Maine

9. Louisiana

10. Florida

Hawaii number one? A Sunbelt oil producer like Texas or Oklahoma would seem to be a more logical choice. How could an island that is forced to import all its fuels have the lowest energy costs? The answer lies in Hawaii's climate.

The formula used for calculating energy costs took into account the raw cost per Btu for electricity, heating oil, and natural gas. The formula calculated the percent use of oil and natural gas for heating and then constructed the total heating dollar by multiplying the percent use times the raw cost for each fuel. This figure was then plugged into a formula incorporating the number of heating days, while the price of electricity was factored into the number of cooling days. Also taken into account were the electricity costs involved in day-to-day operations, such as office lighting and running plant machinery.

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