This is how to build the next Silicon Valley

“It makes no sense why 90% of all venture capital is clustered in five or six cities in the country,” says Rhode Island governor Gina Raimondo.

Elected in 2015 as the state’s first woman to hold the office after a career in venture capital herself, she acutely understands the need to level the playing field for entrepreneurs outside of Silicon Valley and New York City.

Providing more startup funding in states such as hers isn’t just about funding the founders themselves; it’s about boosting local economies. When she took office, Rhode Island’s unemployment rate was the highest in the country. (It’s now in line with the national average.) Under her leadership, Rhode Island became the fourth state in the country to offer tuition-free community college for every high school graduate.

Raimondo outlined her public policy ideas to help fund and incentivize entrepreneurs during a recent discussion with Steve Case.

Case, who founded AOL in 1985, has spent the last 15 years focused on Revolution, the Washington, D.C.-based investment firm that backs entrepreneurs across the country.  His Rise of the Rest Seed Fund invests solely in companies based outside of New York City, San Francisco, and Boston and has invested in more than 150 startups in over 70 U.S. cities.

Here are some of the issues they said both investors and state governments should focus on to bring more investments:

Battle the “brain drain”

States such as Rhode Island are home to major universities, but often, as soon as the students graduate, they leave for opportunities in major tech hubs. Raimondo pointed to her Wave Maker Fellowship program, which repays the student loans of STEAM graduates, if they stay in the state and work for or start businesses in the field. “These graduates likely otherwise wouldn’t have stayed in Rhode Island,” she said. “It’s created an ecosystem of talent.”

Expand access to networks

Case highlighted his Rise of the Rest tour (a literal bus tour in pre-COVID-19 times) that exposed entrepreneurs across the country to investors they otherwise wouldn’t have had access to. Inequality is huge in funding access, not only because of geography but also through gender and race. (Less than 10% of VC money goes to women, and less than 1% of VC funding goes to Black entrepreneurs.) Case has partnered with companies such as Morgan Stanley to focus on growing the networks and access to funding for underserved founders.

Think more broadly about the next round of PPP funding

On a national level, Case hopes that Congress will focus the next round of the Paycheck Protection Program on not just existing businesses, but also new businesses and job creation.

Listen to the entire discussion below.