SBC Examines How to Invest in Rural America
This week, the House Committee on Small Business Subcommittees on Economic Growth, Tax, and Capital Access and Agriculture, Energy, and Trade held a joint hearing to examine venture capital's role in helping small businesses access capital and highlight success stories of organizations that provide resources to small businesses in rural America.
"Access to capital continues to remain a top concern for American small businesses--nowhere more than rural America, which has been slower to recover from the recession. Although venture capital has become a popular financing mechanism for small businesses trying to expand, data shows that more than 75 percent of venture capital goes to just three cities in the U.S.," said Economic Growth, Tax, and Capital Access Subcommittee Chairman Dave Brat (R-VA).
"Small businesses and entrepreneurs must be able to access capital so that they can continue to operate and expand their businesses and also attract talent, dollars, and jobs to their communities Investing in and growing rural America is vital not just to the citizens who live there, but also to the future of our country," said Agriculture, Energy, and Trade Subcommittee Chairman Rod Blum (R-IA).
Witness Testimony: A Need to Expand Venture Capital to Rural Areas
"Investment in venture-backed companies in the United States reached $57 billion in almost 4,000 deals in the first half of 2018. And yet, only a fraction of these dollars found their way to funds and companies based in rural America. The capital deficit is starving innovative and valuable growth opportunities," said Mr. Matthew M. McKenna, Executive in Residence, Rural Opportunity Initiative of McDonough School of Business at Georgetown University in Washington, D.C.
"America's heartland lacks the critical access to capital enjoyed in Silicon Valley, New York and Boston. Three-quarters of venture capital is being invested in just three states. Our home state of Ohio received less than 1%. Talent is equally distributed but, if capital continues to be concentrated in the hands of a few based on geography, we risk letting this momentum fade away," said Ms. Falon Donohue, Chief Executive Officer of VentureOhio in Columbus, OH.
"The landscape of agriculture and rural America is diverse and complex. Historically, some small and/or emerging farmer-owned cooperatives have been overlooked when it comes to financing and other technical assistance. To truly fulfill our mission and strengthen our rural communities, we also recognized a need to serve these customers whenever possible," said Ms. Amy H. Gales, Executive Vice President, Regional Agribusiness Banking Group of CoBank in Greenwood Village, CO.
"If we are able to expand access to capital to any entrepreneur who faces barriers, more Americans will be able to contribute to the economic vitality of our country," said Mr. Ross Baird, President of Village Capital and Innovator-in-Residence at Ewing Marion Kauffman Foundation in Alexandria, VA.