Louisville Leverages Venture Capital to Create Jobs & Prosperity

By: Joe J. Wallace

During the early nineties Louisville and Evansville were on the same level when it came to local venture capital firms that offered funding for local entrepreneurs with ideas to pursue prosperity. At that time both Evansville and Louisville had exactly zero venture capital firms. Local people with ideas in need of funding had no choice but to pack their bags and leave town to pursue entrepreneurial dreams

Today it is a different story. Louisville is the home to twenty four (24) venture capital firms that manage a total of $800 Million while Evansville is still waiting for that first venture capital firm to set up shop. As much success as Louisville has had in growing a venture investment community other similar cities have latched on to the national venture capital phenomena that has been the catalyst of the technology revolutions in both Silicon Valley and the Boston area. According to the Nashville Entrepreneur Center, Nashville, Tennessee is home to venture capital firms that have $2.3 Billion under management and available to entrepreneurs.

Louisville’s road from being a venture capital no-place to the home of 24 firms and $800 Million of available investment funds started where all such roads must start, at home. There was no emissary from the City of Louisville that went to Silicon Valley and convinced firms there that Louisville was the place to be. At that time Louisville was not the place to be so efforts to convince outsiders to come there would have been a complete waste of time. Louisville’s first venture capital firm, Chrysalis Ventures grew from the profits made by Humana, the pioneer of the Jarvik artificial heart transplant.

The successes of the Humana Corporation’s internal entrepreneurship created the wealth needed and the mindset necessary to launch Chrysalis Ventures as Louisville’s first venture capital firm in 1993. The other twenty three firms to form in or enter the Louisville market for entrepreneurship followed over the next several years. The venture industry continues to grow and Louisville is now recognized worldwide for pioneering medical products and services through entrepreneurship efforts made possible by local investment. Outside firms have now recognized the local talents that local dollars have leveraged to create wealth in Louisville and are eager to get in on the action.

Chrysalis today is headquartered in Louisville and has offices in Cleveland, Pittsburgh, Ann Arbor and Houston. The wealth and profits from that expanded effort are of course repatriated to the home office and are available to Louisville entrepreneurs.

One of the portfolio companies of Chrysalis Ventures is AchieveCCA, a former Evansville based business that was founded by 2007 candidate for Evansville City Council and the inventor of the “sewers before stadium” mantra, Andrew Smith. AchieveCCA was chosen as a portfolio company by Chrysalis due to the recognition of the simple yet low risk approach they pioneered to assist hospitals in the recovery process of patient debt. Achieve CCA was recently profiled as growing to over 200 employees this year. When AchieveCCA left Evansville for Louisville, it was still in the start-up stage with few employees and was seeking local investment. That investment never came and today AchieveCCA is a Louisville success story.

There are many similar stories where the fact that local investment dollars are not available, have caused educated, ambitious, and energetic young professionals with ideas to depart this region. Others just find a job and shelve their dreams. We are all a little worse off in terms of opportunities, lifestyle, and prosperity because there are no established local investment firms.

The importance of start-up firms to a local economy is summed up by the Ewing Marion Kauffman Foundation in a study that concluded that “nearly all” of the jobs created from 1980 to 2005 nationwide were created by companies that are less than five years old.

How long can a city survive without investing in its own talented and ambitious people? I guess that answer depends on ones definition of survival. Perhaps a better question would have been, “how long can a city grow and prosper without investing in its own homegrown talented and ambitious people”? The answer of course is not at all, unless ones definition of growth and prosperity is simple survival.

References:
http://www.chrysalisventures.com/
http://www.achievecca.com/
http://www.chrysalisventures.com/2009/12/achieve-cca-expects-to-have-more-than-200-employees-in-louisville/