Rhode Island ranks last in New England for the amount of venture capital investment in local business. The finding is part of a new report on the state of Rhode Island’s small business climate.
According to the report, commissioned by the nonprofit Rhode Island Foundation, about 90 percent of the state’s private companies are small businesses – meaning they employ roughly 20 people or less.
The report finds many of those businesses find it difficult to connect with resources they need, including venture capital.
The Greater-Providence area saw 12 venture capital deals in 2015, compared to more than 400 in Boston. Rhode Island Foundation Senior Vice President of Strategy and Community Investments Jessica David said part of the reason is that most venture capital is being poured into technology.
“We haven’t yet developed the cluster of activity that a Boston or a Silicon Valley has, so in terms of where venture capitalists are looking to locate, we’re not quite there in level of activity,” said David.
The report finds most Rhode Island small businesses are in the healthcare, retail and hospitality industries.
Additionally, David said many small business entrepreneurs need more financial training.
“One of the huge needs around capital is not just the availability of money, but also the financial literacy of businesses and business owners, and their personal credit, to be able to be ready to receive capital,” said David.
The report calls for more training and services for small business owners. It also suggests the need to change tax laws and business regulations but declines to give specifics about which changes should be made.