Thesis: by investing beyond the Bay Area, NY, and MA, the venture industry will play a vital role in spreading the benefits of tech job income and job growth, thereby allowing for broader access to the fruits of the venture-backed economy. More evenly distributed access to opportunity will bind greater numbers of the electorate to the innovation economy and the values and mores that support its innovation and progress. Much has been written about the VC industry's atrocious track record of hiring women and minorities at the Partner level. Perhaps to gender and ethnic diversity, we should add geographic diversity. Today, flyover country is in real economic pain and access to opportunity, income growth, and the fruits of the technology economy are off limits as capital is not flowing into areas where returns MAY exist.
concentration of wealth and lack of access to opportunity on the coasts led to alienation of large numbers flyover country voters and helps explain the Rust Belt's support of Trump. Simply put, Trump voters no longer believe in the benefits of our economic model and systems and are looking for a reboot, no matter how poorly characterized Trump's plans are.
venture capital is concentrated in CA and select other markets (blue states) and the benefits of the job and wealth creation are not available to those in red states. In the last three years, 47% of all venture dollars, or $78.4 billion, went to California. Comparatively, in 1995, 27% of venture dollars went to California. Since 1995, California's share of venture dollars increased by 74%, while total venture dollars increased by a factor of 4-5x. Ie, California benefits from the double whammy of winning market share in a growing market.
Per the Brookings Institute, since 1975 average earnings in advanced industries have increased almost five times as fast as those in the overall economy. Every advanced industry job supports more than two others, versus .4 new jobs in non-advanced industries. Advanced industry wages enjoys premiums across the full educational spectrum - PHD to GED. Non-tech job income growth is flat over the last forty years. Tech job growth is highly correlated with access to venture capital. Without venture capital, quality advanced industry jobs are not possible and talent flight to opportunity leaves a regional brain drain with long term impact.
In terms of addressing the question, "what impact will Trump’s election have on venture capital?" #ElectionTech, I would argue a slightly different point, "what impact can the venture capital industry have on the electorate." The VC industry can democratize the tech economy's benefits by investing in markets where access to capital is highly limited but where talent, drive, and value are found.
The obvious counter case is that VC dollars chase returns, not social change and economic development. 100% agreed. Is today's capital concentration simply a matter of return opportunity, or are there other variables at work that are not tied to merit? If the benefits of today's economy are increasingly tied to advanced industries, fueled themselves by venture dollars, can we afford not to focus on providing increasing access to capital in markets where little to none exists?
In response to: "what impact will Trump’s election have on venture capital?" #ElectionTech