Venture Capital Collaboration Determines Market Emergence Strategies (Delta County as an Example)

Investment interest is like the clang of champagne glasses 🥂to the entrepreneurial class. "What is an idea if there is no market demand?" they may have learned from hard years of torturous failure (Sounds brutal 😨). Entrepreneurs see problems while Venture Capitalists (VC) see marketable solutions. The dream and the dollars makes a marriage of convenience between the two.  With financial mentorship, start-ups have a chance to be acquired by a parent companies that are in need innovative products and ideas. Those who think they "got what it takes" to build their own empires can always throw their javelins into IPO ring.

Prior research indicates start-ups do well when they work within an innovative environment with other like minded people. What we don't know is how collaborating among venture-capitalists (VC) impacts the outcome of start-ups as they emerge on the global market. Investment interest will form the structure of the blossom. 

The researchers analyzed 11,000 U.S. start-ups on Crunchbase backed by venture-capital (VC) firms to determine how they are related IPO (Wang, Pahnke & McDonald, 2021). What they found was... 

1. Jointly funded start-ups by knowledgeable VC (focused) are more likely to exit by acquisition (bought out by the bigger firm). 

2. Start Ups funded by less knowledgeable VCs are likely to be IPOs.

Why are investment strategies important to government? When these start-ups are purposeful (tied to an industry) and connect with investors (interested sources of capital) they have opportunities for faster growth which in turn impacts things like jobs, taxes, opportunities, etc... A few examples of what might apply hypothetically to a place like Delta County:

1.) Space/Military Industry: Utilizing existing( and attracting new) small batch SME manufacturers for specialized production for key clients (skills will spill over to other SME in the area). A specialized cluster forms within a larger cluster.

2. Outdoor Manufacturing: Outdoor manufacturers are looking for new ideas and are willing to invest in micro tourist manufacturers that have unique products (i.e. snow shoes, arrows, skis, bikes, etc..). Small manufacturing also brings tourists which feeds ideas and brand awareness.

3. A Relationship?: Start-ups feed innovation and local skills in a way that leads to improved development in multiple industries (i.e. outdoor gear, military equipment, custom space equipment/parts, metals research, etc...) When industries develop together they build off of each other's strengths, ideas, and resources.

The research provides some justification that encouraging investments will have an impact on the type of businesses that grow within the area. In this example, focused investors (knowledgeable) in Delta County will be looking at specific products while unfocused venture capitalists will be seeking profitability through IPO. The spill over between different types of businesses can enhance both of them through focusing on specific products for investment and allowing related businesses to find related market needs (variability that keeps a cluster adjusting).

{I'm working on a theoretical concept using Delta County MI as an example to attract entrepreneurs to utilize local facilities (SME and/or tourism/outdoor related micro manufacturing), attract venture capital investors, and bring those start-ups to market competitiveness (value for acquisition, IPO, private venture on s, m, l batch production). The model seeks to foster quick development through innovative clustering that creates a wider utility of capital (all kinds) to enhance (and create new) export oriented industries. ...(or something like that 🤔👀).HERE.}

Wang, D., Pahnke, E. & McDonald, R. (January 20, 2021). The Past Is Prologue? Venture-Capital Syndicates’ Collaborative Experience and Start-Up Exits. Academy of Management Journal-Press. Retreived 02-21-21 https://doi.org/10.5465/amj.2019.1312