This partnership between programs dedicated to rural economic development and state-backed venture funds is unusual because while a number of states have one or the other programs dedicated to rural counties, Colorado may be the first state to combine the two programs. The fund will start with an allocation of $9.0 million, with the option of adding an additional $3.0 million more.
The new investment fund signed off on by Governor John Hickenlooper in September, will provide entrepreneurs in the state’s rural areas with access to early-stage investment capital and/or debt for startups. The fund will focus on agriculture, advanced manufacturing, education, health and wellness, tourism and outdoor recreation, energy, natural resources, clean tech and technology, and information, reports Venture Beat.
Rural versus urban communities
Colorado recognizes there is an economic divide between rural and urban communities. In its broadest sense, this divide is seen in rural regions across the country. Recent research has shown there is a significant lag in job growth in rural areas, affecting the poverty rate in those rural communities, with prime-age workers being poorer than their counterparts in urban areas.
Additionally, a disproportionate number of rural workers have been affected by technology and environmental regulations, although the research shows that these and other factors, such as education, cannot be fully explained by the characteristics of the rural population. This means reducing rural poverty will require attention to the structure of rural economies and communities.
Rural America and innovation
It may be surprising to learn that in rural communities with fewer than 20,000 people, there is a far larger percentage of entrepreneurs. These individuals are more resilient and have businesses with higher five-year survival rates. But at the same time, how can a community retain that resilience when it once was a booming coal or timber town?
America was born and grew to what it is today because of entrepreneurs, and we see that grasp of innovation in the machinery we use in farming and mining, as well as the new technology that runs our factories and businesses. However, because of the divide between rural and more suburban regions, entrepreneurs have come across barriers to investment capital.
Getting investment capital into the hands of qualified innovators is the whole idea behind Colorado’s new investment fund. And with our rapidly changing economy, the fund sends a message to rural communities that they will not be left behind. The fund is not only a step in the right direction, but it sets an example the White House and Congress should follow.
Anyone in Colorado, regardless of the size of the town they come from, can do what Twitter co-founder Evan Williams did. He grew up in a town with a population of just 369 — which shows that disruptive innovators can come from very small places.
