Three investment lessons I learned from Colorado Capital Conference 2018.
Why and How to invest local smartly?
Represented as Watson Institute (Watson is where I am working on my own business), with our Executive Director Brin and three other scholars (Norman from South African, Nzambi from Kenya and Mahmoud from Egypt), I attended the Colorado Capital Conference 2018 hosted by Rockies Venture Club.
I think it is good to write the theme of the conference here in case some readers not familiar with this conference.
Angel Investing has traditionally been a local activity. Angels support businesses in their own community in a time where investors are sending their capital to Wall Street where anonymous managers invest in companies that take jobs away from local communities and send the profits right back to Wall Street, leaving intra-coastal communities in the lurch. Economic development 101 tells us that if we keep capital in the community, we get a “multiplier effect” when cash is recycled throughout the community, resulting in 3–5 times more economic impact than when it is shipped back to corporate headquarters somewhere else. Join us in the Colorado Capital Conference 2018 where we will look at how Angel and Venture Capital investors can get better, more tax advantaged returns by investing in their own communities and diversifying their portfolios by investing local and creating positive social and economic impact.
Invest Local
In the front door and near the stage, there are several exhibition boards with an interesting photo on it shows where to invest:
- Wall Street?
- Main Street?
This is an interesting fact that there is a significant investment trend is
Most part of capital is invested in California, New York, and Massachusetts
Which means that other places actually are nearly ignored in terms of investment and investors tend to only look at those so-called “Golden Area”. That why Colorado is special and is cultivating the community which helps local businesses and startups to grow and looks for impact as well as return.
Because people often saying,
You can either invest for return or invest for impact.
But Colorado is building a community that integrate both side.
There are two major reasons that make this happen,
- More and more Investors focus on investing in local
- Entrepreneurs thrives locally
Challenges faced when investing local
Different in Talents
Often times, there is no different in quality of entrepreneurs from different places. But what is different is the need of education, here we have talents, but they are not the same with entrepreneurs in New York or California.The entrepreneurs here need some education. Not only in research area since some of entrepreneurs don’t do their home work before approach to investors.
But in a broader sense, entrepreneurs are not only finding investment, but fining partners. Let’s say, you can raise ten thousands dollars doesn’t necessarily means that this investor is right for you. And the key is, whether can this investor help you beyond write a check.
Limitation of funding
Often times, the foundation or investor in midwest don’t really have that amount of money to invest in. So investors need to spend long time in finding enough capital partners. Normally it takes 9 investors in each round and the amount of time cost in huge, this increase the local investment.
Not like at coast, once you get a big name to invest, other investors will follow them quickly without hesitation.
Lack of ambitious
Just imagine that there is a line which represent goals/ambitious, here are different positions that entrepreneurs locate compare between local entrepreneurs and entrepreneurs at coast.
- Coast: way above the line, reasonably ambitious
- Central : below the line. So local investors need to help entrepreneurs to see a bigger picture
There is no difference of quality of entrepreneurs, it is just that investment is the whole picture, not just an idea.
Sustainability, Self succulency
- Coast: Entrepreneurs often bootstrap up front, so when they begin to raise money, their companies are already profitable, this makes investors easier to make the decision to invest on them.
- Midwest: Breakeven is already nice when raising money.
Because investors look for a real business, and often times they don’t want to put all the eggs in the same basket, so if there are 10 suitable companies, investors will invest in 10 and since this increase the likelihood of success, and this is more practical.
Suggestions for Entrepreneurs
- Find mentors, get trained. Specialty and knowing basic info in vital.
- Eco system doesn’t appear from no where, it happens with relationships, friendships, and etc. So building relationships, communities help entrepreneurs moving.
- Collaboration, open communication.
THE INNOVATION BLIND SPOT — Keynote
Actually data shows with the past 30 years, the number of establish new startups id dropping and the number of firm closer is increasing.
In the list of amount of new companies open each year, Colorado is even not in the top 5
So the question is: Does investment really helps entrepreneurs? What are those questions that we are trying to solve?
Here are some interesting data, from all the startups
Most of the investment is at NYC, California and Boston.
81% of new business doesn’t receive help from either venture capital or bank loan.
What if we missing something which are our blind spots.
Bigger is better?
It’s not what you know, it is who you know
“two-pocket thinking”
Top 3 correlation with success
- Self awareness
- Have a woman in the funding team
- Grit and perseverance
As an entrepreneur, I am happy to be here in Colorado as part of the community even not for very long, but I believe the power of local and local can make even bigger impact.
If you want to know more about business strategy and planning, you might also interest in:
My name is Meiling, a marketing master student at NYU. I am during my Gap Year and write reflections and business related inspiration.
