Analysis highlights ‘capital gaps’ hamstringing Oregon business potential

June 11, 2012

The study, “Oregon Capital Scan: A Developing Ecosystem,” identified eight so-called “capital gaps” affecting employers across the spectrum of Oregon industries.

The study was commissioned by Oregon State Treasurer Ted Wheeler and The Oregon Community Foundation. Other support that made the report possible came from Meyer Memorial Trust, Business Oregon and Portland-based CTC Consulting.

The primary goal: Provide policymakers and financial leaders with a clearer understanding of the state’s business capital landscape, which will foster well-educated decisions to strengthen the Oregon economy.

“For Oregon industries to get back on track and to thrive, they need to have access to financing to expand and hire,” said Treasurer Wheeler. “We are working with executives, entrepreneurs and community leaders across the state to identify the smartest ways to invest in Oregon.”

The study will be part of the dialog for how to best prioritize and leverage state economic development resources under the new Oregon Investment Act, which was proposed by the Treasurer, passed by the 2012 Legislature and signed into law in April by Gov. John Kitzhaber.

The law envisions creating opportunities for private foundations and investors to help augment public resources for economic development.

“Now that we know where the general gaps exist, we can be strategic in developing ways to improve the capital ecosystem in Oregon,” said Max Williams, president and chief executive officer of The Oregon Community Foundation. “It was great to work with our partners on this effort.”

The session at the Governor Hotel brought together more than 65 small business, investment and civic representatives to discuss the findings and potential steps to expand opportunities for financing. Also in attendance were several of the appointees to the new Oregon Growth Board, which was created by the Oregon Investment Act. That board meets for the first time on June 26.

The report is available at:

Capital gaps are defined as a disconnect between the supply of capital and the qualified demand for capital – for example, from promising companies that need capital to grow. Business capital is a vital ingredient to generate and sustain economic development.

The study is based on data from more than 90 participants. Participants included angel investors, venture capitalists, bankers, municipal lenders, micro-lenders, representatives of community development financial institutions, state finance program leaders, investment bankers and managers of economic development district loan funds.

Examples of the data gathered include assets available to invest and estimated investment in 2012.

The study identified a number of gaps in Oregon’s capital flow, including seed stage capital transactions of $100,000 to $500,000; growth capital for smaller companies with profits of $500,000 to $3 million; and working capital (lines of credit worth at least $150,000) for small manufacturers.

The study also provides broad recommendations to begin addressing capital access concerns. Those include:

  • Create an Oregon investment vehicle to foster a self-sustaining Oregon capital ecosystem, and to invest a proposed “Oregon Portfolio.”
  • Lead a dialog with representatives of life sciences industries and loan capital providers.
  • Assist with mentoring for entrepreneurs and startups.

The State Treasury protects public assets and saves Oregonians money through its investment, banking, and debt management functions. State investment policies are overseen by the Oregon Investment Council. The State Treasury also promotes public outreach and education to help Oregonians learn strategies to save money, invest for college and make smart financial choices. You can track Treasury-related news on Twitter at @OregonTreasury.

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