to look for deals in early-stage companies in urban and rural areas. In particular, we focus on companies where there’s a potential for job creation.” As is the case with most venture capital arrangements, support as well as money is provided.
“We are very involved in helping the businesses in which we invest,” says Tesdell. “We may take a seat on the company’s board, help to develop new markets, and line up other financing.”
A list of the various community development venture capital funds can be found at www.cdvc.org.
With all of the financing options available to small businesses, a well-run company with a well-reasoned business plan need not run short of cash. Even if traditional banks and venture capitalists turn you down, there are plenty of other capital ideas.
DEBITS & CREDITS
Here is how some financing techniques stack up:
Traditional Bank Loans
Pro: That’s where the money is
Con: Collateral and a long record of profitability might be required
Pro: Some community VC firms target urban and rural areas to promote job creation
Con: Most traditional VC firms focus on making very large investments in high-tech industries rather than back small, low-tech startups
Pro: Entrepreneurs might be able to borrow small sums that other lenders won’t consider, sometimes without collateral or a credit check
Con: Loan size is limited and the process may be time-consuming
Pro: Financing arrangements can be very flexible as angels often provide knowledge as well as capital
Con: Not only can angels be hard to locate, they need to be investigated by entrepreneurs seeking to protect intellectual property
Accounts Receivable Financing
Pro: Accelerated cash flow
Con: Costs may be considerable