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With no niche here investors fly over

BY DON MECOY Published: May 10, 2009
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It’s hard for an Oklahoma entrepreneur to get noticed by venture capitalists who fund early-stage companies in hopes of a payoff when the company sells or goes public.

"Absolutely,” said Mark Heesen, president of the National Venture Capital Association. "There’s no question that geo-graphy counts.”

Heesen, in Oklahoma City last week, said Oklahoma has virtually no standing among major venture capitalist firms. Heesen’s organization represents hundreds of such firms, which control about $200 billion in assets.

In recent years, Oklahoma has received just a small fraction of 1 percent of the nation’s venture capital funding, according to the National Venture Capital Association.

Those kind of numbers support the state’s reputation as a "fly-over” state when it comes to attracting outside financing, much of which goes to high-profile regions such as California’s Silicon Valley, Seattle, North Carolina’s Research Triangle Park and Cambridge, Mass., Heesen said.

To attract investors, Oklahoma needs to focus on a niche, Heesen said. Minneapolis, Minn., chose to focus on medical devices and has become a hotbed of companies, executives and attorneys with ties to and knowledge of the growing industry, Heesen said.

"There are flyover states, but there are also areas that have been able to say, like Minneapolis, that we’re going to become very proficient in one area,” Heesen said. "If you’re a venture capitalist from the coast, you’re in Minneapolis if you’re a medical device investor. They will go to those regions of the country when there is an area of expertise that’s not found in other parts of the country.”

For Oklahoma, emerging areas like clean tech, which includes solar and wind power and battery technology, or new agricultural products could be opportunities to make a mark, Heesen said.

William Paiva, who works with the Tulsa-based Oklahoma Life Sciences Fund, said he thinks Oklahoma’s strong energy sector positions the state well to succeed in the clean tech area.

Starting small
Tom Walker, chief executive officer of i2E Inc.

Venture capital investments by region
FIRST QUARTER 2009

Silicon Valley…$1.2 billion

New England…$376 million

New York metro area…$323 million

Los Angeles/

Orange County…$207 million

Texas…$156 million

Northwest U.S.…$130 million

Midwest U.S.…$122 million

Southeast U.S.…$113 million

San Diego…$87 million

Colorado…$77 million

SOURCE: PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report

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