Most of the large employers in the region didn't move here; they started here decades ago as entrepreneurial companies. Similarly, one of our best opportunities for future job growth will come from startup companies being formed here today. But small companies can grow into large companies only if they get the financial backing they need, particularly seed and venture capital.

Last year was a banner year for Pittsburgh-area entrepreneurs seeking venture capital. As of the third quarter, more than $220 million in venture capital investments had been made in the region's firms, the third-highest level in the past decade. Although that's still smaller than in many other regions, it's more than in Houston and Portland, Ore., and almost as much as in Atlanta, Chicago and Minneapolis/St. Paul.

		Harold D. Miller, former president of the Allegheny Conference on Community Development, manages Pittsburgh's Future LLC, a regional economic development policy initiative that publishes www.PittsburghFuture.com. His column looking beyond local statistics for insights into the regional economy appears monthly.

Even more impressive is that the Pittsburgh region had the largest growth in venture capital investments of any region in the country over the past year. Average quarterly venture capital investments in local firms during the first nine months of 2006 were nearly quadruple the level in 2005. In contrast, data from the PricewaterhouseCoopers MoneyTree Survey show that venture capital investments in regions such as Boston, San Diego and Silicon Valley increased only 20 percent or less in 2006.

True, nearly half -- $100 million -- of the venture capital investment in Pittsburgh in 2006 went to one firm: Targe Energy Coal LLC, a coal mining, gas drilling and coal reclamation company based in Aspinwall. But even without that one large investment, Pittsburgh still had a bigger increase in venture capital investment than almost any other region in the country. Investments in such companies as BPL Global, Cohera Medical, HyperActive Technologies, Plextronics and Precision Therapeutics demonstrate the region's diverse strengths in fields ranging from advanced materials and biotechnology to energy and information technology. In fact, over the past year, Pittsburgh had the largest increase in the number of firms receiving venture capital of any region in the country.

Can the region keep up this pace? The good news is the region has a wealth of research and development assets in both universities and private corporations, and we are seeing a growing number of startup firms commercializing university-developed technologies, thanks to the combined efforts of the universities and organizations such as Innovation Works, the Technology Collaborative and the Life Sciences Greenhouse.

However, formal venture capital funds are increasingly focusing on later-stage venture funding rather than early-stage financing. As a result, a startup company may never reach the point where it can qualify for venture capital unless it can find early-stage funding from another source.

What's the answer to the early-stage capital gap? Angel investors -- high net-worth individuals making investments of $25,000 to $250,000 in startup companies. In addition to a number of individual angel investors, the Pittsburgh region is fortunate to have a professionally managed angel network. Blue Tree Allied Angels (www.bluetreealliedangels.com) has 43 current angel members and has invested $3.8 million in 10 companies to date. But Blue Tree needs more angel investors to join its ranks.

Pittsburgh also needs a professionally managed angel fund so that high net worth individuals who don't have the time to participate in an angel network can still make early stage investments. Innovation Works (www.innovationworks.org) has been working to catalyze creation of such a fund, and the appointment of a fund manager is expected soon. Although $2 million has been assembled to start the fund, success will depend on finding additional individuals willing to invest.

If we want more startup companies, we will need more angel investors. Although angel investing is risky, if done properly, investors can make significant returns on their money and help grow the region's economy at the same time.