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Draft of September 2008
The success of Californias Silicon Valley has led other regions to
attempt their own high-tech transformations, yet most imitators have
failed. To build a start-up driven high-tech community, at least two base
elements must be present: entrepreneurs and funding for their ventures.
While some regions face a shortage of talented entrepreneurs, other
regions may encounter a larger problem on the funding side. This Article
reveals that angel investors, through their recent organization into
professional investment groups, are now uniquely positioned to fund local
entrepreneurs in non-tech regions. Unlike private venture capitalists,
angel groups are found in all areas of the country and prefer early stage
start-ups, and unlike state-sponsored alternatives to venture capital, angel
groups have both the market incentives and expertise necessary to select
and develop the best local entrepreneurs. Angel groups are only about a
decade old, but given their advantages might be able to spur high-tech
transformations in more regions in the future.
INTRODUCTION
How might a region transform itself into a high-tech
entrepreneurial community? The success of Californias Silicon Valley
makes high-tech transformations the holy grail of economic development.
Regions that continue to lose traditional jobs in manufacturing,
agriculture, and other sectors have actively pursued high-tech
transformations because of the high-paying new jobs, increased tax
revenues, and educated workforce they bring. In light of Silicon Valleys