| The downward trend of the economy continues. An | | | | reinvest, attract new customers and expand without |
| old axiom in business says that the best time to start | | | | spinning its wheels by making money only to |
| a business is during an economic downturn, but all | | | | immediately buy something it needs. |
| indications point to the same downward trend in | | | | Helping the Economy |
| available venture capital. | | | | The importance of venture capital now is that many |
| It seems that most venture capital groups are sitting | | | | companies that have been successful in year past |
| on cash, riding out the uncertainty that dominates the | | | | are no longer making money. They are stuck in |
| economy. It's not that the money isn't there; the | | | | neutral and not making any significant gains. |
| groups are just unwilling to take a chance right now. | | | | Equipment wears out. Needed improvements to |
| Why is that? | | | | business infrastructure are constant. They need to |
| The goal of most start-ups is to make it to initial | | | | compete in order to survive and to do that, they |
| public offering (IPO) or to be acquired by another | | | | must improve their situation. |
| company. The rate of failure in business start-ups is | | | | It's not a trickle down or a trickle up theory; it's a |
| alarming. With the rise in fuel costs comes a rise in | | | | trickle out theory. The business buys equipment to |
| the cost of everything else, including capital | | | | make money by attracting more customers and |
| equipment, labor and supplies, as well as construction | | | | keep people employed who build the stuff another |
| and real estate. Companies that will not invest in their | | | | company needs to supply the company... you get the |
| own business are very likely not going to acquire | | | | picture. |
| another company. With the high costs associated | | | | It's a web of economy. It's one that needs to |
| with starting a business, people are relying on initial | | | | succeed in order for our economic system to |
| profits fund their new business. | | | | succeed. Even the United State Government is |
| Unfortunately, these businesses that open on a | | | | getting involved by offering money to certain |
| shoestring are not surviving. Consumers simply will | | | | industries. Say what you will, no matter your politics, |
| not spend money these days, the competition is high, | | | | but the Federal government just became the biggest |
| and it costs too much to promote and advertise a | | | | provider of venture capital in the country. Usually, |
| new business. | | | | venture capital groups do get some say in the |
| How Venture Capital Helps Small Business Become Big | | | | decisions made by the start-ups they help finance. |
| Business | | | | They get a seat on the board, they get stock in the |
| The influx of money in the initial phases of a start-up | | | | company which gives them a say in how its run. |
| helps the business to acquire equipment, real estate, | | | | Unfortunately, many companies in these key |
| and anything else not associated with the day-to-day | | | | industries are not using this money to invest; rather, |
| operation of the business. This type of investment | | | | they're using it to pay down debt. |
| helps the business to grow very quickly. Usually. | | | | Finding Venture Capital |
| In this economy, consumer confidence is low. People | | | | Many venture capital groups exist, and are looking for |
| are sitting on cash reserves and not buying new | | | | ways to invest. An Internet search can provide small |
| products... from small appliances to automobiles, they | | | | business owners with venture capital possibilities. Most |
| are either fixing what they have or doing without. | | | | groups will express interest in the start-up, rather |
| Service industries have also taken a hit. More | | | | than waiting, but usually, the business seeks out the |
| consumers are choosing to do it themselves rather | | | | capital. Most will require a presentation, including a |
| than hiring a company. | | | | detailed business plan. It is better in this instance to |
| Venture capital allows the start-up to buy the | | | | offer too much information about the business, the |
| equipment and inventories necessary to grow quickly | | | | industry, the key players, the product, and most |
| and begin making money faster than it otherwise | | | | importantly, the pay-off to those who are investing. |
| would. It allows the new company to promote and | | | | |