Page 148 - 1-Entrepreneurship and Local Economic Development by Norman Walzer (z-lib.org)

Building Communities through Entrepreneurship Development 137

diverse group of institutions organized to provide equity capital to rural en-
trepreneurs. Programs ranged from publicly funded and managed to pri-
vately funded and managed and included community-level as well as state-
level programs. While not all of these programs have succeeded in achieving
their double bottom line goals, the lessons learned from the early innova-
tors have helped create a growing and robust CDVC industry.
According to an assessment by the Community Development Venture
Capital Alliance, the trade association for the CDVC industry, in 2001, com-
munity development venture fund investments were distributed geograph-
ically in a pattern similar to the distribution of establishments across rural
and urban areas (Schmitt 2003). While traditional venture funds made 98.4
percent of their investments in metro counties, CDVC funds made 76 per-
cent of their investments in metro areas. This figure is slightly below the
percent of establishments located in metro counties, 80.8 percent.
Traditional funds made no investments in completely rural counties,
where 2.2 percent of establishments reside, but CDVC funds place 2.2 per-
cent of investments in these same counties. The CDVC industry clearly has
an important role to play in providing rural entrepreneurs with access to the
equity capital they need to grow.
CEI Community Ventures, Inc. (2006) is a CDVC that was organized as a
subsidiary of Coastal Enterprises, Inc. (CEI) in Maine. CEI had a long his-
tory of supporting business development in rural Maine when it created CEI
Community Ventures. Community Ventures makes investments in busi-
nesses at all stages of development (early, development, and later) in
amounts ranging from $250,000 to $750,000. While the investment crite-
ria include traditional measures such as management and market, they are
also trying to make deals in targeted rural communities and in companies
that help them meet their financial, social, and environmental goals. This
$10 million fund is sustainable in part because of its relationship with and
support from CEI.
The other trend that bodes well for rural entrepreneurs seeking equity
capital is the rise of angel investor networks throughout the country. Angel
investors are high net worth individuals who invest directly in an entrepre-
neurial venture or who pool their investment capital in networks that invest
in entrepreneurs. The Center for Venture Research at the University of New
Hampshire estimates that, in 2004, angels invested $22 billion, an amount
equal to that invested by traditional venture capital firms (Jossi 2005). An-
gel investors bring much more than their investment capital to entrepre-
neurs, however; they usually have entrepreneurial or managerial experience
that can be critically important to a rural entrepreneur experiencing rapid
growth.
In the past, angel investors were linked to entrepreneurs through rela-
tively informal networks. A local banker might know an investor and put