The Southern Culture of Risk Capital: The Path Dependence of Entrepreneurial Finance

The U.S. South has experienced remarkable job growth over the past quarter century; however few of these jobs were endogenously created. While the primary economic development strategy in the region has been to rely on branch plants to create locally-owned spillovers, recent efforts have shifted to the promotion of entrepreneurship via industrial district spillover (e.g., North Carolina's Research Triangle Park). Despite these efforts, rates of entrepreneurship remain low throughout the U.S. South. This research identifies elements of the dominant regional culture which contribute to this entrepreneurial weakness in North Carolina's Research Triangle Park. A series of interviews with regional venture capitalists were conducted to identify the role of culture in their industry. The significance of regional culture on this form of entrepreneurial finance is identified via inter-regional comparisons and surveys of entrepreneurs. Finally, the iterative effects of Southern culture are traced through the four phases of entrepreneurial finance.