Most businesspeople know that if you’re looking for venture capital, there’s a lot of it to be found in Silicon Valley and Boston. But there’s a wide world of VCs based in smaller markets and overseas that might be good funding sources for your business, depending on the type of business you operate, where you’re located, and the markets you serve.
One study found that about half of all U.S. venture capital comes from VC firms based in Boston and California’s Silicon Valley, but what about the other half? Smaller U.S. cities can be fertile hunting grounds for venture capital. Top second-tier markets with substantial venture capital activity include Boulder, Colorado; Salt Lake City; Westborough, Massachusetts; Ann Arbor, Michigan; Norwalk, Connecticut; Providence, Rhode Island; Southborough, Massachusetts; Stamford, Connecticut; Melbourne, Florida; and New Haven, Connecticut.
Venture capital firms in these cities tend to be more approachable than the big technology funders. In Boulder, for example, many VC firms will meet briefly with those pitching legitimate business-funding proposals. That’s far different from firms in the top-tier cities, which typically require at minimum a warm introduction.
You don’t have to be based in the same city as your target venture capital firm, but it can help. If you identify a firm that funds companies similar to yours and you can’t get its attention from afar, try to visit the area. You might attend a local business networking event, a business-plan boot camp, a venture-funding conference, or similar activity in the market where your target VC is based. With luck, you might meet your target at the event or at least connect with local businesspeople and other venture funders in town to learn more about how to approach your chosen firm.
Another strategy is to investigate what venture capital activity there might be in the town where you live. Places you might inquire and learn more about your local VC scene include major research universities and technology networking groups.
If your company does business in Europe, particularly Western Europe, or is looking to expand into the region, consider investigating European VC firms as possible funders. The European Venture Capital Association estimates their VC industry is only about one-fifth the size of the American VC community, but it can be fertile ground for the right company.
European VCs like to work with companies doing business in their region because they can share their expertise and help make the company successful abroad. One strategy for connecting with European VCs is to network with American VCs you may know. Commonly, venture funding rounds have a number of different venture capital firms participating, so U.S. firms may be able to refer you to European firms they know are interested in businesses in your sector.
Be warned that most European VC is focused on various areas in technology such as computer software, information technology, biotech, clean technology, and green technology. Your company will likely stand a better chance of landing funds from a Europe-based VC fund if your business falls into one of these categories.
Business reporter Carol Tice contributes to several national and regional business publications.