For new and small businesses to succeed, they need a combination of a marketable concept, a clear business plan, good timing, and adequate resources. While many entrepreneurs identify great ideas, prepare excellent business plans, and know just when the time to take action is right, lots of them lack the money and other resources to bring their ideas to fruition. Fortunately with a little research entrepreneurs can find a venture capitalist, Angel investor, or CAPCO program that can help them get the resources they need to build and maintain their businesses until they become profitable.
Venture capital is usually cash investments made in exchange for shares as well as an active role in running the company in which the investment is made. Venture capitalists tend to invest in young companies with potential for high growth. They invest equity capital and take higher risks, but they do this in exchange for the opportunity to get higher returns. Some entrepreneurs like investments from venture capitalist because it gives them a longer investment horizon. However, venture capitalist demand the ability to be involved in governance, capital structure, strategic marketing, and board participation to actively monitor the companies in which they invest.
Angel investors are typically individuals with high net worth looking for high returns by investing in start-up companies. They are often former successful entrepreneurs themselves. They tend to look for companies with not only high growth potential, but also solid business plans, and strong management teams. Angel investors often invest in businesses involved in industries with which they’re familiar. Many angels offer their money, their advice, and their business experience, and want to be actively involved in the business through mentoring or acting as a consultant to the entrepreneur. Sometimes the angel invests take bigger risks and lower rewards if they really like the business concept.
Certified Capital Company (CAPCO) programs are designed to increase needed capital for local businesses to facilitate job creation and economic development. The ultimate goal of the programs is to help strengthen local economies through providing access to capital for businesses that may not qualify to receive loans from traditional sources. These programs help build venture capital infrastructure, create jobs that pay well, provide career opportunities, and increase tax revenues. One in 5 states have CAPCO programs. These public-private partnerships have had a positive impact on many communities and state economies.