Business & Employment Law Attorney
866-693-5541 | 303-424-4286

Denver Business and Commercial Law Blog

The current condition of venture capital

Prospective entrepreneurs in Colorado who are seeking business financing may consider using venture capital. They may benefit from learning a few facts about the state of venture capital.

According to PitchBook-Venture Monitor, the last time the number of companies that have received venture capital funding was as low as it is now was in 2011. This is despite the slight jump in the amount of investment funds in the first quarter of 2017 compared to the last three months of 2016.

Venture capital investing in the first quarter of 2017

Colorado entrepreneurs who are interested in funding their businesses using venture capital might be interested in learning that in the first three months of 2017, venture capitalists invested more than $16 billion in nearly 1,800 companies. Of that capital, half of it went to more than 500 companies in California. However, of the companies that did receive venture capital investments in that time, 69 percent were not in California. Companies in Washington D.C. and 46 states all received venture capital investment.

The most popular industries were software and life sciences. More than 900 deals were in these areas. However, software was among the industries that also had the highest number of exits in the same time period. The industries of software, commercial services and biotech made up almost three-quarters of all exits.

Expanding a business into international markets

There are a number of reasons why a Colorado business owner might want to expand into the international market, and one of the biggest is the incredible potential for growth. However, many business owners are intimidated at the idea of this type of expansion, and this is especially true after the uncertainty related to the passage of Brexit.

There are a number of ways that business owners can start selling outside of the United States. One great way to help increase the chances of success is to sell to a number of countries. This spreads out the risk, and if a company's offerings don't catch on in one country, success is still possible in others.

Less venture capital funding for women-led companies

Venture capital funding is essential for many new businesses. However, companies with female founders in Colorado and elsewhere tend to receive much less funding than companies founded by men.

In 2016, companies with all-male founders received $58.2 billion from venture capitalists. In contrast, venture capitalists invested only $1.46 billion in companies helmed by women. The vast difference in the investment amount is on account of the differences in the quantity of deals and the average size of the deal based on gender.

Alphabet asserts third patent claim against Uber

Colorado residents may be aware of the ongoing legal dispute between Alphabet and Uber about self-driving car technology. Alphabet, the parent company of Google, previously filed an intellectual property lawsuit against Uber, and the company has now added a patent claim to its complaint.

Waymo, the self-driving car division of Alphabet, filed the lawsuit. It alleges that a former employee stole 14,000 files of confidential information about technology for detecting light and sensing ranges that is used in autonomous vehicles. In its original complaint, Waymo alleged that Uber infringed on two of its patents. The complaint was amended to add a third patent.

The importance of a business plan for funding in Colorado

A number of individuals who have great ideas for new products never obtain the funding they are seeking. One reason for this may be that they have created workable product plans but not full business plans. In reality, both are essential parts of starting up a successful organization.

Generally speaking, a business plan should tell someone not familiar with a business how it will run, and it will go over a wide range of things. Good plans should cover things like funding, financial projections and business strategies. These plans should also include some information about market competition and how this business' product is better or more attractive than ones made by other organizations.

What to do when the business hits a standstill

From time to time, even the most successful companies can experience a lull in growth. Colorado business owners experiencing similar troubles may find the following tips helpful.

Sometimes competition, a slow economy and market changes can bring occasional roadblocks to business owners. Other times, customer expectations and demands change or technology shifts, causing growth to taper off and producing a lull in a company's activity. At this point, business owners should consider making some changes that could revive their organizations and cause them to flourish again.

Businesses outside major cities may struggle for venture capital

Venture capital may be less accessible for investors in Colorado and other locations outside of the Silicon Valley, according to one report. It found that almost half of every dollar of venture capital goes to Silicon Valley. Los Angeles, New York and Boston receive almost a third of all investments, so there is less than 25 cents of each dollar remaining for the rest of the country. In 2015, five states didn't receive any venture capital investments.

Entrepreneurs report a geographical bias for the coastal cities, and an individual in St. Louis was advised to say he was moving to San Francisco. If venture capital investors expanded their geography, many smaller communities throughout the country could see enormous economic benefits.

Thinking like a business owner

Colorado workers who are transitioning from employee to business owner may find it difficult to get used to their new role. However, new business owners can take advantage of certain strategies to make the adjustment easier.

Entrepreneurs should use their businesses' overall purpose to guide all their actions. The objective should go beyond making money or being able to work one's own hours. The ideal business purpose should instead focus on the customer.

More metro-area businesses are closing than opening

Colorado entrepreneurs who are interested in starting their own businesses should be aware of the results of a report that has been released by the Economic Innovation Group. It showed that in 2014, the most recent year with available data, there were more company closures that startups in two-thirds of all metropolitan areas around the country.

The number of startups had surpassed that of business closures every year for decades even during slow periods. However, the economic downturn in 2008 caused these figures to reverse. While it's normal for recessions to slow the growth of new businesses, recovery from the last one has been especially weak. For example, the report reveals that in 2014, there were still 182,000 fewer businesses than in 2007. This decrease in the formation of new enterprises has led to a phenomenon where more Americans than ever before are working for established companies.