Sitting in the SRI Private Equity Conference, I've learned that private capital is definitely moving outside the usual places. While the PWC study of venture capital dollars does say that as a percentage, the rest of the country got only 45% of venture dollars in the past few years, the truth is that the rest of the country provides more than 50% of deals. Megadeals are done in Silicon Valley, New York and Boston, but smaller deals are done all over the country.

Because valuations are lower outside Silicon Valley, New York and Boston, ignored regions now make sense for both investors and co-investors, say the conference's attendees. There is now a regional focus to venture capital investment. However, the regions that are attracting capital, and those in which venture capitalists are opening offices, are places where retirees from large corporations are producing startups, or government spending for research is affecting both labs and universities. Thus, New Mexico looks more interesting than Arizona to a VC, because of the government's $3 billion investment in Sandia Labs.

The Southeast is a vibrant market for deals, although the dollars per deal are less. Atlanta has doubled its venture funding over the last three years, and Florida and the Research Triangle are growing fast, largely because of good research at Duke. Atlanta is a center for software security and financial services technology, which brings out of region money to the area.

In that region, too, Nashville is a health care services capital and Bell South and Cox produce communications and telecom startups. Over the next five years, the southeast will emerge as research center as Scripps is going to south Florida and Mayo does deals down south.

But the Southeast is undercapitalized, more now than ever. From forty VC firms during the bubble, it's down to a handful.

In the Pacific Northwest, Microsoft has 60,000 employees that produce many spinoffs. But the northwest also has a wireless background, 3G and cellular and an Institute for Systems Biology. Because of the expense of wet labs, much research on genomics is done through computational biology, and Dr. Larry Hood has a big lab there. Pacific Northwest National Labs, the largest data center in the world, is now fabricating nanotubes with megabucks from the government.

An underappreciated feature of the northwest is that Intel's presence is bigger and bigger in Oregon. Oregon now has the headquarters of Intel capital, as well as the headquarters of the wireless and WiMax initiatives and the digital home initiative. In addition, there's lots of corporate infrastructure there. In fact, although Craig Barrettt lives in Arizona, Portland has Intel's largest facility in the world.

Linux is also big in Oregon, because Linus Torvald lives in Beaverton. Oregon also boasts HP's image processing headquarters, its biggest business. To capitalize on all these companies, Oregon has aggregated its players into the Oregon Nanoscience and Microtechnologies Institute, which has received over $20m in government funding.

The Midwest, say its boosters, is the Rodney Dangerfield of venture capital, which creates both a challenge and an opportunity. The challenge is the perception that nothing goes on,, and there's a slight isolation problem because the region isn't close enough by air to the major VC centers. However, the midwest probably has the deepest technology base in the US, partly because of its corporate headquarters (Motorola, Baxter, Tellabs), and partly because the Wisconsin, Illinois, and Michigan universities have huge research grants. For an investor, we were told, there's limited competition, so valuations are low.

In the west, the place that most clearly fits the pattern of the regionalization of venture capital seems to be Colorado. Technology is concentrated in Denver, Boulder and Colorado Springs, all within an hour of Denver. It's a very concentrated area to work in, because the universities are also scattered up and down that corridor, as are the industry and government labs. Colorado has one of the highest concentrations of PhDs in the country, and people want to stay there when they move there.

The venture capital infrastructure began in the '60s when IBM opened a facility there. Sun and HP are both outside of Boulder, as are Amgen and Pfizer. All of that provides the base, but there is also a community of serial entrepreneurs that make the venture market interesting. The infrastructure is also there with Silicon Valley Bank and Cooley Goddard.

I'm not even going to tell you about San Diego, because we all know what's happening there. It's the one place we really have our eye on as we try to compete in biotechnology.

So how do we compare here in Arizona? Well, we didn't have a venture firm on the panel, so I asked. I was told by a Silicon Valley woman VC that Silicon Valley and Texas firms look all the time at Arizona deals because it's a short trip to Phoenix on Southwest. And I was told that Colorado venture firms, such as Sequel Venture Partners are looking at deals in Arizona.

But I was also told that our infrastructure for deals (banks and law firms) are fifteen to twenty years behind. So according to the money people, it's not money we lack. I guess it must be lawyers :