Friday, May 05, 2006

What a Successful Venture Capitalist Says a Region Should Do To Succeed

David Morgenthaler, founder of Morgenthaler Ventures and one of the grand-daddies of the venture capital industry, wrote an op-ed piece in the Cleveland Plain Dealer last month describing what he called the "quiet crisis" facing Northeastern Ohio, due to the lack of a coherent strategy for promoting innovation-based economic development.

He writes:

..if this city and region want to be world-class, we have to decide what we want to do, what we need to do and how to implement it. Some people think that the arts – our orchestra, drama and other culturally enriching things – will save us. Some think amenities will attract creative people with innovative ideas that will rejuvenate the region…[but] Only high-class jobs for creative people will bring them here…In the end, it is the growth of attractive jobs that drives population growth; it is the export of goods and services that brings back money to build a region’s wealth. It’s as simple as that.

Where will the jobs come from?

Most growth in the future will be technology driven because that is where innovation will come from. The key to industrial growth is innovation – real innovation – not climate and not just amenities. If we can produce really exciting new technology or concepts, venture capital will be there.

What does he recommend for the Cleveland region?

  • A regional organization must be in place charged with preparing a regional economic development plan. Which organization should do it? He says: “Quit competing locally: The outside world is the challenge. Unite.”
  • A technology development plan must be prepared.
  • Strengthen education at all levels.
  • Support and strengthen research universities and demand that they keep improving technology transfer.
  • Do what can be done to hold existing businesses and attract new ones, but realize that this is limited. Businesses will do what they must do to survive in a competitive global market.

Not a bad agenda for the Pittsburgh Region, either.


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