Monday, December 29, 2008

Pittsburgh VC

New York Times story about Florida's attempt to grab more of the venture capital market share lists Pittsburgh as a hotbed:

Venture capital is spreading outside its historic hotbeds in Silicon Valley and New England, but so far, Florida has not been getting a significant chunk of the money. The fastest-growing regions for venture capital investment over the last decade are New Mexico, Pittsburgh, Seattle, Los Angeles and the District of Columbia, according to the National Venture Capital Association. Florida will receive only a small fraction of the $30 billion that is expected to be invested in start-ups this year.

I suppose Pittsburgh skeptics could pick apart the numbers. But at some point, the latest renaissance becomes more than regional boosterism. The current economic recession began before most people recognized the downturn. I think Pittsburgh's revitalization is further along than most analysts are willing to admit. My sense is that Pittsburgh has already moved beyond the tipping point.

I'll risk overstating the case by dragging the PNC Bank takeover of National City into consideration:

Pittsburgh-based PNC will be a much more formidable competitor for the remaining local banks and will be a national powerhouse as the fifth-largest bank in the United States. That will make life a little tougher for Northeast Ohio's dozen or so major banks. ...

... While other banks may be breathing a sigh of relief about pricing, they will face a much more daunting competitor than National City was in recent years, said banking expert Fred Cummings, president of Elizabeth Park Capital Management in Beachwood.

PNC, by contrast, is mighty and doesn't have to be distracted by the financial problems that most banks face. It hasn't cut a lot of jobs or its $2.64-per-share annual dividend. PNC actually increased the dividend this year.

Unlike National City, which has been on defense for most of the past two years, PNC will have the luxury of being on offense.

"When you say who are the most stable banks in [Cleveland], you have to say PNC and U.S. Bank," Cummings said.

Pittsburgh's financial district has a sound anchor in PNC. Pittsburgh will fund a big share of Rust Belt redevelopment and entrepreneurial activity. Pittsburgh is booming while other cities and states are going bust. To some extent, the recession is catching up with Southwestern Pennsylvania. But not enough to bury the stark economic contrast with its regional cohort. I'm liking Pittsburgh's position when the national economy starts its recovery.

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