I left off a recent blog entry by stating that ".... Montana will continue to be ignored by the capital markets for the foreseeable future." That generated some questions as basic as 'why, and what do you mean?' Second question first. By capital markets, I really mean that segment of the investment industry oriented towards backing private companies. Whether this comes in the form of venture capital (at any stage) subordinated debt, buy out capital or other forms of 'private equity', Montana perpetually ranks at the bottom of most lists in terms of both activity and dollars deployed.

As to why, the answer is multi-faceted. Lack of a deep enough pool of qualified management talent, lack of sufficient technical talent, lack of a strong entrepreneurial infrastructure including legal professionals, accounting firms, marketing consultants, and venture lenders all of whom deal with gazelle-like companies on a daily basis - we've heard that argument before and it has merit. There is also just the sheer level of start-up activity in Montana relative to other areas such as the Colorado front range, Austin, Cambridge and of course Silicon Valley. Relative to those markets, we are not even a blip.

But the more important question is whether this is a bad thing? Start-up companies predicated on securing private equity to get them rolling have two absolutely critical markets that they must secure. They must sell the financial community - or at least one investor willing to write a check and the ultimate users of their product or service. What a relief it is for Montana companies to 'only' have to sell to one market!