Business Perspectives

Venture capital fuels entrepreneurship as an economic driver

I moved to Wichita in January 2016 to start e2e. In the past 20 months I’ve seen great strides in progress. Downtown development has accelerated. The sense of civic pride has accelerated. The entrepreneurial ecosystem has accelerated. The next level of progress is for this acceleration to translate into economic growth and prosperity. That means it’s all about the money.

Recently, my colleague Jacob Wayman wrote about Entrepreneurship as an Economic Driver. This is fueled by private investment, or venture capital. Earlier, I wrote about the relational nature of Wichita’s private investment community, and how under-represented Wichita tends to be in venture capital surveys.

Now I’d like to show just how much private investment it will take to get Wichita on par with the top 20 performing cities in the nation and a select group of Midwest peer cities in the top 100.

Wichita companies would have to receive $371.8 million in venture capital investment to break the top 20 and reach this group’s average venture capital investment per capita. To put this number in perspective, the city of Wichita’s 2018 Revised Long-Term General Fund Financial Plan is $236.7 million. Therefore, Wichita companies would have to raise 157% of the city’s general fund in venture capital to make the top 20.

Notice the cities in the top 20. You’d be hard pressed to find one of them, even the large established cities, whose economic growth is stagnating. This is simple yet profound proof that venture capital fuels entrepreneurship as an economic driver.

To reach a respectable spot on the top 100, Wichita companies would have to receive $23.6 million in venture capital investment to reach the average venture capital investment per capita of Midwest peer cities. This is certainly a more attainable figure. So how do we get there?

The solution is simple: Start at home. There is a significant amount of liquid, high-risk capital from the remnants of the city’s entrepreneurial heydays pre-1980, as well as wealth created since then. e2e recently completed an education series called i2i, Investor to Investor with the objective of demystifying private investing for individuals with the desire to make venture capital investments. The e2e Accelerator program and LaunchPrep, e2e’s partnership with Wichita State University’s Center for Entrepreneurship, are working the other touch point to produce entrepreneurial companies worthy of private investment.

The solution is attainable with more engagement on both ends – more entrepreneurs engaging in the ecosystem that has united to accelerate their growth and more investors engaging the ecosystem around them. That thoroughly puts Wichita’s growth and prosperity within our own sphere of control.

John Dascher is president and CEO of e2e Accelerator Inc. Contact him at jfd@e2eAccelerator.com.

Interested in writing for “Business Perspectives”? Contact Marcia Werts at mwerts@wichitaeagle.com or 316-269-6762.

Venture capital investment compared

Here’s a look at the communities in the Top 20 for venture capital investment. For Wichita to reach the average per capita of the Top 20, it would need $371.8 million in venture capital investment. To reach the average per capita of Midwest peer cities, it would need $23.6 million.

Rank

City

Venture capital investment ($M)

Population

Venture capital investment per capita

1

San Francisco

$16,927

4,656,132

$3,635.4

2

San Jose

$6,883

1,976,836

$3,481.8

3

Boston

$4,443

4,774,321

$930.6

4

New York

$4,218

20,182,305

$209.0

5

Los Angeles

$2,054

13,340,068

$154.0

6

Seattle

$1,204

3,733,580

$322.5

7

Chicago

$1,065

9,551,031

$111.5

8

Washington, D.C.

$857

6,097,684

$140.5

9

San Diego

$805

3,299,521

$244.0

10

Ft. Lauderdale

$642

1,909,632

$336.2

11

Austin

$621

2,000,860

$310.4

12

Orange County

$546

3,172,532

$172.1

13

Atlanta

$496

5,710,795

$86.9

14

Denver

$480

2,814,330

$170.6

15

Provo

$469

585,799

$800.6

16

Philadelphia

$424

6,069,875

$69.9

17

Houston

$397

6,656,947

$59.6

18

Minneapolis

$369

3,524,583

$104.7

19

Dallas/Ft. Worth

$368

7,102,796

$51.8

20

Pittsburgh

$338

2,353,045

$143.6

Average

$2,180

$576.8

Midwest peer cities in Top 100

33

St. Louis

$125

2,811,588

$44.4

42

Kansas City

$91

2,087,471

$43.8

51

Madison

$51

641,385

$78.7

56

Indianapolis

$41

1,988,817

$20.6

61

Omaha

$34

915,312

$37.4

81

Des Moines

$15

622,899

$23.6

93

Oklahoma City

$11

1,358,452

$8.3

Average

$53

$36.7

NA

Wichita

0

644,610

0

Source: National Venture Capital Association & U.S. Census Bureau

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