

A Rant on VC in the Flyover States from an Arkansan that Raised $100 million - quizprep
https://medium.com/@johnjames/flyover-state-venture-capital-a-rant-and-an-action-plan-92f4cf27803f

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Flux159
Reading the article, I was reminded of pg's essay on trying to create another
Silicon Valley:
[http://www.paulgraham.com/siliconvalley.html](http://www.paulgraham.com/siliconvalley.html)

I think its great that the author is putting his own money and efforts into
making northwest Arkansas a better hub for entrepreneurs. However, I think
that one of the reasons that it was/is difficult to get money from investors
in the area is due to the fact that many of the current investors may not have
earned the money through recent startups, which seems to be a key factor in
whether they would want to invest in other startups in the area.

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quizprep
Bingo, Flux159!

That is the difficulty: there is no flywheel effect of compounding investments
in our region.

My company was the only startup liquidity event in recent years in NW
Arkansas.

Not surprisingly, the two or three angels that participated in that lucrative
deal are VERY motivated to continue investing. But it takes a village, and a
couple people don't constitute a village.

Interestingly, I have no shortage of new investors eager to invest in my next
deal.

I've chosen to leverage that goodwill in a grand experiment... My theory is
that by personally helping the best-of-the-best entrepreneurs raise seed
capital (leveraging my goodwill as needed) that I can artificially create the
needed flywheel effect.

I'll either succeed, or turn my goodwill into BADwill :)

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jordantcarlisle
quizprep you know better than most in AR. There's a bit of chicken and egg to
entrepreneur and vc happening.

Do you think increasing startup density will help?

Should this be program driven or entrepreneur/mentor driven? Will your
"venture production studio" look like TechStars (programmatic), YC (mentor
network), or a different variation.

I get pissed off at the amount of people who say we need more entrepreneurship
compared to people shutting up and building. Do you know folks who have the
means to be entrepreneurs in AR, but are sitting on the sidelines?

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quizprep
I'm going to "shut up and build" right alongside the entrepreneurs.

(BTW - Love that phrase... I'm stealing it!)

Clearly this approach is not very scalable longterm across dozens of companies
if I do it alone. So I'm building a team of full-time, world-class experts
(design, dev, growth hackers, entrepreneurs, etc) to also "shut up and build."

With the small team I've assembled, we can build half a dozen "obviously
fundable" projects over the next 6 months. The deal flow is there - in fact,
if additional resources were available, we could launch a dozen.

If I can't find a lead investor for the new projects, I'll simply lead the
rounds myself and hope others follow... again, not long term sustainable (I'm
not a blazillionaire.)

But by leading the first dozen ventures myself, I believe the lemming-like
investors who follow on behind my lead can begin to get some comfort around
building a portfolio.

Statistics and history tell us that we need to take at least 50 GOOD swings to
build a homerun (Series C) business. As a state, we need to take a minimum of
50 GOOD swings every year. (Note the emphasis on the word "good.")

To your second question: I ABSOLUTELY know of entrepreneurs who are sitting on
the sidelines due to lack of seed funding. A couple dozen, actually. I'm not
talking middling college grads either - I'm talking mid-career 25-35 year old,
A+ rockstars who are experts in their field who have a fundable business plan
gathering dust.

They don't jump because the risk is too great. And I don't fault them for
that.

Think about it - as a society who wants more entrepreneurs, we're asking
potential entrepreneurs to abandon a steady paycheck at a cushy job AND risk
their entire life savings to fund their new venture.

Entrepreneurs shouldn't have to bear ALL the risk... even with seed funding,
entrepreneurs still shoulder the VAST majority of risk.

Abandoning a steady paycheck is hard enough... someone willing to that AND
risk their life savings is likely clinically insane. As a culture without seed
funding readily-available for the best and brightest, I believe we're building
a startup system than selects for the clinically insane!

The last thing we need is a bunch of mediocre (perhaps insane) entrepreneurs
pursuing mediocre ideas receiving seed funding from mediocre sources.

