Compare this interview with TA Associates VC Jacqueline Morby ("There are a tremendous number of venture capital firms from outside of Pittsburgh coming in, which is what we need: other people's money -- OPM -- to come and finance some companies and get them going. ") with this column by Harold Miller ("[Local angel group] Blue Tree needs more angel investors to join its ranks. . . . Pittsburgh also needs a professionally managed angel fund so that high net worth individuals who don't have the time to participate in an angel network can still make early stage investments.")VCs and angel investors are distinct but related things; each of these pieces clearly recognizes the importance of both. Still, the different emphasis (more outside money is needed to grow the region, in the first piece; more local money, in the second) is interesting to note. Can they both be right?
I don't think they're inconsistent at all. My stats included "OPM" in the venture capital investments in Pittsburgh area firms, but it's rare that you will get outside VC money without at least some local VC as a lead investor. That's even more true of angels. BlueTree has successfully attracted angels from other regions to participate in investments in Pittsburgh companies, but only because BlueTree is here as the lead investor. If you want other people's money, you have to have enough of your own...
I would think a region would want both forms of capital. You need investors that can spot and invest in good ideas. The more the merrier.
Local investors bring high trust, knowledge of local players and markets, and a desire to make something happen locally. Out-of-town investors are not as tied to the local establishment and conventions, and are better able to make connections to additional ideas, technologies, and markets.
In a region like Pittsburgh with a weak history of entrepreneurship, local investors are needed to incubate emerging ideas that may not be ready for prime time. Outside investors are needed to break out of local orthodoxy.