Venture Lending For Startup Financing

For years venture capital firms have quietly backed smaller firms via venture lending for startup financing. It is only recently that this has become an open program, and one that is tremendously important for many startup companies.

Venture capital firms are notorious for BIG. Big companies, big money, big investment, big return. For decades that philosophy has served them well.

Like the world itself, however, venture capital firms are now looking at niches. More importantly, venture capital firms are instituting formal lending programs for promising startup companies. This is venture lending for startup financing at its best.

Loans range in the hundreds of thousands, rather than the millions. Due diligence, while still intense, is a bit more relaxed. Venture capital firms seem to be looking for ideas that they think will blossom into something bigger, without having to invest the huge amounts of money required in a traditional investment.

Perhaps the biggest shift is that many of these investments are predominantly loans.

The same industry that brought on the dotcom disaster of the late 1990's -- the internet -- is the industry that is prompting this change in venture lending for start up financing. As George Zachary, a partner at Charles River, pointed out, "We think there are going to be a ton of companies that get started with a quarter-million to build consumer services on the internet."

It's about time.

When venture capital firms looked only at huge deals, it forced companies to create a need for money where there was none, just so they could play in the venture capital world. This venture lending for start up financing option makes small investments a real option, and often the best option for thousands and thousands of startup companies.

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