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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