I had an interesting conversation yesterday with a startup founder, who mentioned he was planning on talking with venture capitalists from Northern California, because he thought that they would be much more interested in a consumer Internet startup than VCs in Southern California.

It as fascinating to me, because there have been so many investments and successes in consumer Internet deals, particularly from venture capitalists in Los Angeles–none of which apparently had hit the radar of this particular entrepreneur. I’ve actually found that this is an (unfortunately) pretty common thing to hear from entrepreneurs I meet.

Why is this? I think it boils down to the classic disconnect between entrepreneurs and VCs. Many, many entrepreneurs are coming up from their narrow, respective industries, and if they haven’t raised capital before do not know the people, local funding sources, or even service providers. They’ve developed contacts and know people in their own industry, but not with sources of financing or venture capital. As a result, when they first starting looking for funding they tend to run into all of the coverage and links to Sand Hill Road. Silicon Valley has a lot more “brand equity” in terms of the high tech/venture business compared with Southern California, and it shows. I’m not sure what the solution is here, but I’d love to figure out how to make those folks more aware of the local resources here, and make it all that more likely that they’ll keep and grow their businesses locally.

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Venture Capital by Benjamin Kuo