
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, March 8, 1995                   TAG: 9503080080
SECTION: EDITORIAL                    PAGE: A-6   EDITION: METRO 
SOURCE: 
DATELINE:                                 LENGTH: Medium

IN VIRGINIA, A VOID OF VENTURE CAPITAL

ONE KEY to economic growth is an abundance of ideas, inventions and discoveries for new or improved products and services. But the most promising ideas in the world will go nowhere without money to put them into effect.

Which is why the relative absence of venture-capital activity in Virginia, as reported this past Sunday in the latest Peril & Promise installment, is cause for consternation. This lack implies that good business ideas are not germinating in the Old Dominion, or are sprouting then withering for lack of monetary nutrients, or a combination of both.

Venture-capital funds - unlike, say, banks - are interested specifically in investments in new or newly expanding businesses. The risk inevitably is high; in return, venture capital looks for the prospect of high reward, often as an equity partner.

According to the latest annual report of the National Venture Capital Association, venture-capital funds in 1993 invested more than $3 billion in 969 different companies. Of the 40 states reporting, Virginia ranked 24th. California easily led the way (nearly $1.2 billion), followed by Massachusetts ($380 million), Texas ($288 million), Connecticut ($176 million) and New Jersey ($169 million). Virginia's total? Less than $17.6 million.

The contrasts are even more vivid if regarded on a per-capita basis. New England - with, among other things, its wealth of research universities - is the capital of per-capita capital: nearly $65 invested per resident in Massachusetts; and about $55 in Connecticut and $25 in New Hampshire.

Other centers of venture capital are huge California, where the 1993 per-capita investment was nearly $40, and Colorado, where the figure was nearly $30.

In the South, the numbers are lower, around $10 or less per capita. Even in the South, however, they are seldom so little as in Virginia: less than $3 of venture-capital disbursements per person. The abutting states of Kentucky, Tennessee, North Carolina and Maryland all reported higher per-capita figures.

The silver lining for Virginia is the opportunity all this represents. A fairly modest influx of capital, building as it would be on so small a base, might well work wonders. This is particularly true in Southwest Virginia, location of the state's premier technology-research university with nationally recognized engineering programs.

Virginia Tech has put $5 million into three venture-capital funds with the expectation that Tech-related companies and commercially promising research will get serious consideration. That's important to Tech because of its royalty interest in companies formed to make commercial use of new technologies developed by university researchers.

Attracting venture capital is also important to Southwest Virginia. New technologies are the source of new industries, which become the employers of tomorrow - if, that is, there's money to put the new technologies to work in the first place.

by CNB