Professor Raiton’s Inside Perspectives: Entrepreneurship, Creativity, Innovation

By Matt Richtel, New York Times

Venture capital is on the move — to New Mexico, Pittsburgh and points beyond.

A new survey shows that venture capital investment – the stuff that fuels technology innovation – is growing in parts of the country where it has been largely unapparent. The survey from the National Venture Capital Association, based on data provided by Thomson Financial, found that while Silicon Valley remains the hotbed of seed capital, other regions are seeing it grow more quickly.

In New Mexico, for instance, venture capitalists put $128 million into 21 companies in 2007, the survey found. Compared to the investments made a decade ago, that’s an increase of 600 percent in the number of companies and of 375 percent in the amount of funding.

Or take Pittsburgh, the second fastest-growing region of the country in terms of venture capital investments over the last decade. In 2007, it was home to 44 new venture-financed companies – up 267 percent from 1997 – that collectively got $198 million, an increase of 513 percent).

Other regions where venture capital is growing relatively quickly include Seattle, Los Angeles and the Washington metro area.

At the same time, Silicon Valley – including the San Francisco and Berkeley area – remains the unambiguous leader in seed capital investments. In 2007, for example, venture capitalists put $7.6 billion (with a “B”) into San Jose and another $2.5 billion into the San Francisco/Berkeley area.

A number of factors propelled growth elsewhere. Among them, some not-very-startling developments: increasingly capable telecommunications and accessible travel has made it possible for venture capitalists to live in financial centers but to oversee investments in distant areas. But there have also been specific efforts by regions outside of Silicon Valley to attract capital, and those efforts are paying off, said the National Venture Capital Association.

The trade group argued that, for instance, New Mexico has improved its business environment, has a slower lifestyle that is attracting some entrepreneurs, and has made an effort to attract alternative energy investments. Pittsburgh, the trade group asserted, has engendered investment in part because of the strength of institutions like Carnegie Mellon University and the University of Pittsburgh Medical Center (where life-sciences developments are catering to a surge in the likes of biotech and medical technology investment).

More broadly, the growth of interest among venture capitalists in alternative energy appears to be benefiting regions of the country with different environments and climates.

Don’t expect Silicon Valley to give up its epicenter status anytime soon – or the critical mass of investors, universities and entrepreneurs.

“We’re not saying anyplace is going to overtake Silicon Valley,” said Emily Mendell, a spokeswoman for the NVCA. “We’re just saying you can take venture capital out of Silicon Valley.”