We firmly believe that a regional focus and presence is critical to success in seed and early stage investing. Seed and early stage companies are often pre-product, pre-customer and pre-revenue. It is necessary for successful seed and early stage investors to work actively with their portfolio companies in building management teams, defining product and market strategy and assisting in financing and fund raising. To be most effective in this role, it is important for the investor to have a regional presence in order to be near the portfolio company and become actively engaged with the company.
Once again we see that proximity is the rule informing the geography of venture capital. Since Pittsburgh can't satisfy the investment appetites of Draper Triangle, the fund is expanding operations to relatively nearby Cleveland (recently opening a branch office there). Pittsburgh is close, but not close enough. What about extending a presence to NoVA or Raleigh-Durham?
What I see is an irrational bias that assumes Cleveland to be a natural partner for Pittsburgh-based venture capital. This same parochial mindset informs Richard Florida's infatuation with mega-regions and his evangelizing of Tor-Buff-Chester. Another similar project imagines a Great Lakes economic community around water transport and trade.
I don't mean to suggest that the various mega-regions are dysfunctional and put the cart before the horse. Cooperation at the mega-regional level may help get around the considerable impasse against regional formation. I can appreciate the obvious coherence inherent in these mega-regions. However, I put a higher value on a given city's global connectivity over that of hinterland integration.
Knowledge economy geography is about the exceptions to the rule of proximity. The hinterworld of New York City allows for the fact that the relationship with London is more important than the one with any other city within the mega-region. I'm not sure that pursuing a policy of hinterland development is a good idea.