All the talented entrepreneurs in America aren't living in just three cities.
- It helps fuel America's growing polarization. While it's easy to dismiss the growing gap between "red states" and "blue states" as one solely based on political differences, the reality is much more nuanced. The differences in economic opportunities between residents of the three cities mentioned above and residents of, well, just about everywhere else is stark and growing.
(And the solution to that economic divide isn't bringing back old industries--it's creating new ones.)
- The lack of investment capital available everywhere else sends a message to the residents of smaller cities and rural communities that investors (who, by and large, would fall into the "elite" getting beaten up by the political bases of both political parties) believe all the smart people live in just a handful of zip codes. Again, doesn't help with the polarization problem.
- If 70% of all venture capital is flowing to entrepreneurs in just three cities, a national economy suffering from years of stagnating productivity and slow growth is pinning most of its hopes for a return to an innovation-fueled boom on a relatively small number of people.
In other words, if talented entrepreneurs starting companies outside of those three cities don't have access to capital, all of us are worse of economically and politically.
That makes the work of St. Louis-based Lewis and Clark Ventures (and other funds like Lewis and Clark) particularly important. Founded in 2015 to address a lack of Series A and Series B capital in the Midwest, Lewis and Clark is one of the first funds outside of Silicon Valley to raise a $100 million tech fund. The fund focuses on Series A and B funding rounds, with investments typically in the $3 to $7 million range.
And investments aren't limited to startups in St. Louis. While roughly a third of its portfolio companies are in St. Louis, the fund also invests in startups located in places where founders face a similar lack of access to venture capital.
However, Lewis and Clark has played an important role in building St. Louis' fast-growing entrepreneurial ecosystem, and believes it is important for new funds to partner with a startup scene's existing organizations.
"When raising a first-time fund in an 'emerging geography', it's important to be sensitive and respectful to the other entities in the local community that may be impacted," said Lewis and Clark Principal Scott Bernstein. "For cities like St. Louis, or expansive regions like the Midwest, it is crucial that everyone work together. The sum of the whole is greater than the individual parts."
It's about the acknowledgement of an important idea that often gets ignored in politics and public policy, and that's the idea of "home."
Yes, founders, entrepreneurs, and talented employees could increase their access to capital and good jobs by moving somewhere else, and some people do make that choice.
But many don't.
For many high-potential entrepreneurs the bonds with their family and community will keep them in the towns, cities, suburbs, and farmhouses they grew up in--and that doesn't mean they are less talented, less intelligent, or less capable of succeeding.
Thankfully, there is a growing number of policymakers, community leaders, and unique venture capital firms like Lewis and Clark Ventures that understand that.