| For most business niches, 2010 couldn't come fast | | | | they will have the funds to do so. Some will. The key |
| enough. 2007 was not great. 2008 was really scary. | | | | is to find them. This must be done by finding the |
| 2009 was less scary and more a brutal grind despite | | | | venture capitalist that is in harmony with your |
| what technically appears to be economic recovery. | | | | business. |
| So, what does 2010 portend when we look at the | | | | Your first step is to research, research and research. |
| field of venture capital? Let's take a look. | | | | You want to approach only firms and angels that |
| Venture capital firms have hardly been exempt from | | | | have shown a keen interest in the exact niche you |
| the demolition derby known as our economy the last | | | | are mining. You might have the greatest smart phone |
| few years. Mergers and failures have happened and | | | | program in the world, but approaching a VC fund that |
| they will continue. This is because venture capital | | | | is interested in hardware technologies isn't gong to |
| firms are looking for funding from investors to fund, | | | | get you anywhere. Be as specific as you can |
| well, your business. 2009 was a year when even a | | | | because "worried money" is going to stick to what it |
| great idea like Google would have been hard pressed | | | | knows. |
| to get a cash infusion. Credit markets are tied up and | | | | If you have a successful history with investors, |
| banks aren't loaning a red penny. | | | | emphasize that. Everyone is very risk sensitive. If |
| Unfortunately, 2010 appears like it will be more of the | | | | you've shown you're a successful bet in the past, |
| same. The credit markets will have to loosen up at | | | | make sure that those you are approaching are full |
| some point, but most believe it will be later in the | | | | aware of that. This is one market where what |
| year if not in to 2011. The concerns about housing | | | | you've done lately is almost matched by what you |
| and employment that are making financial markets | | | | did in the past. |
| nervous are not going away. Real estate looks | | | | Finally, consider cutting your program back and |
| particularly troubling as any momentum in residential | | | | funding amount requested. This is a tough market. |
| will be threatened when the first-time homebuyers | | | | There is not a lot of optimism. Asking for smaller |
| tax credit expires in the second quarter. At the same | | | | funding amounts is, again, a method for limiting the |
| time, the commercial real estate market is going | | | | risk that is being faced by the venture capital fund |
| from bad to worse. With even the most optimistic | | | | and its investors. You can then map out a plan where |
| expecting unemployment to remain a major issue | | | | things speed up in two to three years when markets |
| through the year, 2010 is shaping up to be tough. I | | | | are positive and funding is much more readily |
| hope I am wrong, but venture capital will be | | | | available. |
| impacted by what happens regardless. | | | | I would love to tell you things will be wonderful in the |
| The good news is all venture capital firms want to | | | | venture capital market in 2010. Maybe the will, but I |
| invest. This is because investing in startups and small | | | | really doubt it. That doesn't mean you can't get |
| businesses is what they do. The only question is if | | | | funding. It is just going to be more of a challenge. |