Venture capital is the canary in the information economy's coal mine, what Alan Greenspan would call a "leading indicator." Yesterday the research firm Venture Economics released a gloomy survey with preliminary numbers on the state of VC across the nation. In the quarter just ended, the amount of money committed to venture capital funds nationally fell to less than a third of the comparable figure a year ago.
Reporters on both coasts were busy crunching the local numbers on these national figures. The San Jose Mercury News ran Reuters coverage of the national survey and supplemented it with the local angle. Compared with last quarter and the year-earlier period, Silicon Valley VC suffered more than the national average. Reporter Matt Marshall worked hard to find something positive to say about the debacle, quoting a vice president of Venture Economics, the surveying firm: "Even if NYC raises more money, it's all exported to California." If you say so.
The Washington Post's reporter had an easier time finding good news in the VC numbers. Investment in the DC area was up almost 27 percent over the previous quarter. The Post's Nicholas Johnston interviewed local companies and DC-based venture firms to turn in a refreshingly upbeat piece of reporting.
The Boston Globe focused on two Massachusetts VCs who have a different idea about what "local" means. The principals of Village Ventures are identifying "venture capital deserts": areas with a good mix of techies, universities and quality-of-life features, but not enough capital. Cities like Rochester, Minn., and Boise, Idaho, were mentioned. The Globe's Beth Healey covered the plans of the Berkshire-based VCs with a degree of skepticism, calling their approach "a strange and untested recipe." Healey noted that Village Ventures has so far placed just $5 million of the $100 million its backers have pledged. Any takers?
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