Manufacturing may never again be the U.S. employment engine it once was, defined by big industrial brands, employing thousands of people for generations.

But the sector can again become a jobs engine with the launch of thousands of new manufacturing businesses, a ground-up wave of middle-market companies across diverse industries. What we lack in large we’ll make up for in volume, in hot sectors like food and beverage, advanced contract manufacturing and lifestyle and consumer industries.

A significant barrier is financing. Raising capital is still hard. Early-stage businesses face an especially challenging venture capital environment. Growth companies in the middle-market have more options — investors of all stripes like companies with strong balance sheets. But to say that growth-minded manufacturers are turning away deals wouldn’t be accurate.

Last week the Denver Business Journal reported Colorado venture capital deals were down “sharply” in Q1 of this from the same time in 2015. Financing experts I know point to a slow IPO market and caution not to read too much into the development. But total VC activity in 2015 was also down from 2014, even though Colorado remains in the top 20 percent of states in deal flow. The state’s an attractive place for investors when deals go down.

Is manufacturing benefitting? Technology has long been the preferred domain of the venture community; manufacturing, not so much. But tech-enabled manufacturing in the form of bioscience or medical device companies is certainly in the VC mix.

Middle-market deals seem there for the taking. CohnReznick stated bluntly late last year, “The markets are bloated with cash right now. A research report by RR Donnelley found that PE general partners only returned $232.5 billion in 2014 and that capital called by PE investors was also down. This represents a 21st-century high for total net cash flow in the segment. . . . PE continues to demonstrate faith in manufacturing companies as the final quarter of 2015 unfolds.” The firm estimated that more than 1,650 mid-market private equity deals took place in 2014, a record high flow. “More than 1,030 of these deals,” the report added, “or roughly 62 percent, occurred in the industrial manufacturing and wholesale distribution sectors.”

The trend here is more hit and miss.

Companies in hot sectors with a solid track-record, like those in craft food and beer, have their pick of private equity deals — if they’re open to terms and changes that come with the transaction, either real or perceived. ‘Institutional’ money is increasingly available, like the natural and organic food funds targeting Boulder County’s ecosystem. There’s now growing competition among investors in the hopes of finding the next Oskar Blues, or an exit with a Boulder Brands. Technology-fueled manufacturing is also hot. It’s easy to see the recently announced $500 million ‘middle market’ fund contemplated by Boulder’s tech-centric Foundry Group deployed in support of high-tech manufacturers.

But with a healthy economy and frothy M&A market, investors are cherry picking, leaving deserving but slightly more risky or lesser known ventures under-funded. Manufacturing may be trending up, and appealing for investors in high-growth sectors, but promising businesses remain undervalued and undercapitalized, or simply unknown. A lot of that cash remains on the sidelines.

Less unknowns means more investing. We’ll try and uncover the ‘top 10 investment opportunities in manufacturing’ this summer at the second annual Manufacturing Growth & Investor Conference. If your company should be on that list, let me know. Or plan on attending the conference July 28.

The goal is to finance a generation of brands and establish a new manufacturing employment beachhead. Entrepreneurs are doing their part.

Bart Taylor is publisher of CompanyWeek. Email him at btaylor@companyweek.com.

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