VC

Dealmakers per Capita

Thanks to a story by Melissa Harris of the Chicago Tribune, we learned today of a new way to measure the health of an early stage ecosystem:  dealmakers per capita

"[Ted] Zoller defines a dealmaker as someone who owns a stake in three or more early-stage technology companies at the same time...

"These risky investments typically range from $50,000 to $250,000 per company.

"'What you have [in the Chicago tech community] is a small number of dealmakers doing more than their fair share to support early-stage technology companies,' said Zoller, who is on leave from UNC while leading the entrepreneurship program at the Kansas City, Mo.-based Kauffman Foundation. 'That creates highly channeled, highly hierarchical dealmaking. A really vibrant entrepreneurial ecosystem would have broader participation.'"

This seems to be an extension of Zoller's earlier research on the most well-connected entrepreneurs, financiers and advisors in the US, where he looked specifically at the universe of early stage investors in the companies in 12 high-tech growth spots - Silicon Valley, Boston, Seattle, etc.  Flip this data around to look at it from the point of view of a regional community rather than from individual investors or companies, and I suppose it can give you a good sense of how broad-based the financial part of the early-stage entrepreneurial ecosystem is in a particular community. 

Of course, not every dealmaker needs to be located IN the community.  Harris points out that, according to Zoller's research, the second most important dealmaker in Chicago is New Enterprise Associates managing general partner Peter Barris, who neither lives nor works in Chicago.   Witness, also, the surging interest by Silicon Valley VCs in the New York City tech scene.  My read is that it is the breadth of participation in an ecosystem, not the actual location of the investors.

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