HalHeinerLogo A while back, I posted a blog post about the track record for the Louisville Venture Club.  The results were not encouraging to new entrepreneurs.  While, It’s not published anywhere, the total 2009 investment dollars number presented at the January 2010 Venture Club Luncheon was just over $20M.  Mark Crane of GLI made it a point to state that he didn’t know about all of the deals in Louisville.  He was positive that there were more deals but that he knew of most of them.  I take “most” to mean at least half or more so let’s optimistically say Louisville VC totaled $40M in 2009.  That’s not enough.

The Ages of Athiria project needed $18M in total funding over two years to produce our game.  VC’s typically earmark 7% – 10% of any given fund to invest in one company.  Using 10% as our number because the math is easier, we needed a $180M fund to look at our company for investment.  There’s exactly one of those funds in Louisville; Chrysalis Ventures and their most recent $175M fund was raised in 2008.  Chrysalis was kind enough to sit with me and talk about my project while I was raising capital but they did so with a caveat that they were not interested in any game development project so I was stuck between a rock and a hard place. 

So, as I was driving into work a couple weeks ago, I had a chance to listen to Hal Heiner on WHAS 840.  He was talking about job creation and job attraction.  What he wasn’t talking about was how to raise government money to fund “shovel ready” jobs or short term temporary work which I found to be refreshing.  He was talking about how Nashville, Cincinnati and Indy all have increased the number of private sector jobs while Louisville has lost private sector jobs.  One of the reasons why he believes that Louisville is losing private sector jobs is because we make it so difficult to start a business here in the city.  He goes on in his white paper on how to accomplish the goal of job creation and attraction and most of it is well thought out and straight forward.  He’s missing a vital piece in my opinion and it happens to be one of the reasons why I failed to get Ages of Athiria off the ground. (There were other reasons that I outline here.)

He isn’t addressing the venture capital community.  When our city is the 17th largest city in the country and we only have $20 - $40M VC investment in total, there’s a problem.  When there’s one fund in the entire city worth more than $150M, it’s hard to grow beyond that $20M total investment number.  It’s even harder when that single fund decides to invest outside of Louisville.  Hal needs to address this most basic reason why private investment is not investing in Louisville based companies.  He’s right when he says that we have a great city and a great workforce.  There’s a pile of potential in Louisville and we’re currently under performing as a city.  I’m hoping that a fresh face in the Mayor’s office will bring an end to the status quo that seems to have developed over the years.

UPDATE: In the time that I have taken to publish this post, I’ve become aware of Senator Dodd’s Banking Bill.  Over at AVC.com, Fred Wilson’s done a great job at outlining the problems with this bill as it relates to venture capital.  Hal needs to address how he’s going to meet his job creation goals when Washington is actively trying to make his job more difficult.  The last thing Louisville needs is a Federal bill that would immediately reduce the number of “qualified” investors in the already small community of investors.