Rural America is ripe with potential, starving for capital

Investment in venture-backed companies in the United States reached $57 billion in almost 4,000 deals in the first half of 2018. Yet, only a fraction of those dollars found their way to funds and companies based in rural America. This capital deficit is starving innovative and valuable growth opportunities across rural communities. Many people think immediately of agriculture when focused on rural communities, yet it only makes up 6 percent of today’s rural economy.One way of addressing the issue of scale that is often a limiting factor for rural investment is the development of funds that target mid-tier investments. The recent wave of Rural Business Investment Companies (RBICs) is a good example.Their charters limit their investments to rural-based businesses and their typical investment slice has been in the $1-5-million range. Another tool is a fund of funds approach, where many small funds are brought together by institutions as way of allowing their customers to obtain the diversity and scale that is denied them in more targeted funds.