There is a limited amount of venture capital funding available for small businesses, and this only complicates the many financial problems that entrepreneurs are facing during these difficult economic times. The federal government and the Small Business Association (SBA) have created a plan to stimulate venture capital funding and make it more readily available to small businesses.
The SBA is encouraging its privately owned venture capital firms to give special attention to small businesses in the coming months. This may impact small businesses in the following ways:
The process of securing venture capital funding may become easier for small businesses.
Experienced investors backed, licensed and regulated by the SBA will become key players in targeted small business endeavors.
More money and attention will be paid to small businesses. In fact, 25% of all new investment dollars must go into small business as part of this plan.
Small businesses may be eligible for up to 50% more funding dollars than previously allowed.
What does this all mean for small business owners? It means the time might be now to make a move and revamp approaches to business. In the past, several small businesses went on to become renowned companies with lucrative venture capital investment relationships. Similar polices influenced the success of companies like FedEx, Apple Computer and Staples – just to name a few.
The federal government and SBA are targeting especially vulnerable businesses that are in their first years of operation with this initiative. These are times during which small businesses are especially susceptible to losses. Negative cash flow is to be expected at the onset of a business venture, and that is why venture capital is so unique. Venture capital investors realize that it’s necessary to work through those first few difficult years in order to achieve profits and a return on investment.
With increased awareness from the federal government and support from organizations like the SBA, small business owners may be able to benefit from venture capital relationships. If your small business is in its formative stages with a promising future ahead, these programs are worth further investigation.