Written by Lisa Canning
Creating the right environment for innovation requires not only a robust culture that embraces the building of social capital but equally access to capital through both small business loans and venture capital investment. Both forms of capital are critical to create a robust innovation ecosystem.
According to the Illinois Venture Capital Association (IVCA), while there was a significant uptick in total VC funding in our state in 2010 and 2011, funding dropped significantly in 2012.
From 2011 to 2012, one-third of the venture capital went to the same 35 companies, with concentrations in biotech, business intelligence, data security, and online consumer tools. The Midwest, historically, unlike Silicon Valley, has been very conservative in its view of what constitutes a viable start-up. The size of the creative sector, and its health, impact economic growth and thus return on investment. VC’s need to not overlook the impact the creative sector can have to their own investments. While most creative businesses will not have venture capital scalability, some in Illinois will. And some will be catalysts for growth across sectors; helping to fuel innovation and productivity in technology, engineering and science.
The IVCA stats also showed a sizable uptick in 2012 in small business loans as well as a 20% increase in early stage vc backed funding for start-ups.
Small business lending in the Chicagoland area grew steadily from 1996 to 2007, accounting for nearly 378,000 loans at a sum of $10.5 Billion, according to the February issue of the Illinois Innovation Index. Although lending was down during the recession, loans to small business began to climb again in 2011.
Small businesses, and especially creative businesses, are an essential part of a vibrant economy. There are nearly 250,000 small businesses in Illinois alone.
Below is a graph on small business lending in Chicagoland:
If you would like to know more about Innovation in Illinois, you can download the 1st annual Illinois innovation Index below.
Illinois Innovation Index 1st Annual Report
About Lisa Canning
What motivates you to explore your creativity? Follow me @IAEOU