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Wednesday, July 15, 2020

Venture Capitalism Under Utilized as a Growth Strategy for Escanaba

Venture Capitalism has the ability to rejuvenate small towns like Escanaba by support entrepreneurs that are willing to move to the area and start new businesses. This is just an article I'm writing for my own understanding and eventually sort of solidify some concepts for a theory.

What we can say is that Escanaba needs new blood. They need people who want to start businesses and create a positive culture that is open to people from different backgrounds. There is more than that needed. Locals also need jobs and that isn't going to come from doing the same old thing the same old way.

Thus any strategy needs to include drawing businesses to downtown empty stores, attracting entrepreneurs that will hire people and then financing them through low interest loans and adventure capitalism.

What we do find through COVID is that many businesses are failing but the stock market has risen. Thus investors are looking for new places to put money. There is no reason why the underdeveloped markets of Delta County can't be part of that.

Reading the article Venture Capital Data: Opportunities and Challenges in the Harvard Business School we can better understand that there isn't enough data for research purposes. We also may realize that if we provide more data on investment opportunities in the Delta County Chamber of Commerce we may raise investments.

The following was taken from the article.....

1. Venture capital is an increasingly important intermediary, able to transform capital into new firms and innovations in an apparently highly productive manner.

2. This intermediary is attracting increasing interest by policymakers and investors, but the availability of data as well as the consistency of the academic findings using these data are still lacking.

3. Roughly one in 500 or 0.2% – of the 600,000 firms (with employees) that are started each year (U.S. SBA (2012)).

4. Kortum and Lerner (2000) find that venture capital is three to four times more powerful than corporate R&D as a spur to innovation.

5. Kaplan and Lerner (2010) find that roughly 50% of the “entrepreneurial” IPOs in recent years are venture-backed despite the fact that only 0.2% of all firms receive venture funding.

We can learn from this situation to determine that venture capitalism is an untapped source for start-ups. There isn't a lot of data out there on them but we do know that if we provide more information on local start-ups and find ways to attract them into a cluster that has the most potential to grow we may also be able to fuel rejuvenation through multiple investments.

Kaplan, L. & Learner, S. (2016). Working Paper 17-012. Venture Capital Data: Opportunities and Challenges. Harvard Business School. https://www.hbs.edu/faculty/Publication%20Files/17-012_10de1f93-30e4-4a98-858c-4137556ec037.pdf

Kaplan, S. and J. Lerner, 2010, “It Ain’t Broke: The Past, Present, and Future of Venture Capital,” Journal of Applied Corporate Finance 22 (2), 36–46.

Kortum, S., and J. Lerner, 2000, “Assessing the C


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