VC funding difficult for Spokane startups

Previously, we noted that the Milken Institute ranked Spokane nearly last as a place to start a technology business.

One of several problems related to starting tech businesses in Spokane is access to venture capital.

The following chart is located on the Spokane County government web site in a presentation on Innovation in the Inland NW. It shows that VC funding for Spokane start ups is nearly non-existent. The main exception to the drought of VC funding is 2003 when NVA invested $15.7 million in World Wide Packets (worldwide packets scored $158 million in total investments ultimately).

That same year, Spokane Valley start up, Vivato raised $44.5 million but immediately began laying off its Spokane workforce. Their VCs required that Vivato have an office in the San Francisco Bay area (since a Spokane address was not serious?) and have a strategy for off shoring. Vivato located its executive, administration, sales and marketing functions in the Bay area and did design and manufacturing in Spokane.  But Vivato closed, out of business, in December of 2005, due to building a product that was too expensive for the problem it was solving.

Historically and continuing to the present, except for World Wide Packets (sold to Ciena) and Vivato’s brief tenure, VC funding for tech businesses in Spokane has been essentially non-existent. I know several entrepreneurs who were told by VCs, in so many words, “Great business concept! Move it to Seattle and we will fund it!”

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Racial Diversity in Spokane

Source: United States Census official estimate as of 2008.

Update February 2011: Per the 2010 US Census, the percent that are “White” has fallen to just below 90%. I do not plan to update the charts at this time.

I once read that pie charts are a bad way to represent data.  Here is another version in column format:

Spokane, obviously, is not very ethnically diverse as compared to other parts of the country. This seems more a historical artifact than anything else – located far north of the southern U.S. border, very far northwest of America’s south, well inland away from coastal cities, and that Spokane is economically disadvantaged, it has not attracted a diverse set of people who seem more likely to move to economically advantageous areas such as big coastal cities.

There is some evidence that economic success and diversity are linked – but these seem like correlation studies to me.  Are such areas diverse because they are already economically successful or are they economically successful because they are diverse? Seems to me that economically successful regions attract everyone, increasing the diversity of an area.

I have personally witnessed racism in Spokane – and any that occurs is bad. I have also witnessed tremendous efforts by the community to oppose racism.  I do not know if Spokane is better or worse than similar communities when it comes to racism. That is outside my area of expertise. Another WordPress blog specializes in the topic – please see Spokane Racism. (That web site has not been updated since 2008.)