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Growth in Colorado 2017 venture capital

Businesses seeking seed capital from investors may need to redouble efforts in light of second quarter data in 2017. In Colorado and the nation as a whole, numbers point to larger amounts of venture capital pouring into a smaller number of firms. Appeals to international investors resulted in big gains for businesses in certain sectors. These gains over 2016 increases follow similar ones in the first quarter.

Venture capital funded 31 Colorado businesses in the second quarter. The three leading recipients were a cybersecurity company in Denver, a robotic toy manufacturer and a software developer. The most lucrative sectors receiving outside capital for the first half of 2017 followed suit, including robotics, cybersecurity and mixed reality.

The future of venture capital in the United States

Venture capitalists and angel investors often provide entrepreneurs in Colorado and around the country with crucial startup capital when traditional banks will not. The venture capital industry has changed noticeably with the emergence of micro funds that concentrate mainly on initial seed money, and most industry experts expect the focus of venture capitalists to continue to evolve in the years ahead.

Historically, most American venture capital money has remained in the United States, and investing in foreign markets like China was virtually unheard of just a decade or two ago. However, the industry has become far more international in recent years, and financial analysts expect this globalization trend to continue into the 2020s and 2030s. This overseas focus has prompted many leading venture capital firms to diversify their information gathering and decision-making processes, and companies that have traditionally concentrated on narrow market sectors have begun to broaden their outlooks as a result.

Cannabis trademark considerations

Entrepreneurs and business owners in the Colorado cannabis industry have unique motivations to protect their intellectual property. A strong strategy in many cases requires securing trademark protection for new strains of cannabis as well as cannabis-related products. Trademark protection is available for visual features, such as phrases, symbols and words, that consumers associate with a particular company or product. It grants exclusive rights to the owner to use it in commerce.

Trademarks are governed by both state and federal law. Protections are available in many cases even without registration, so long as the mark is used in commerce and the intention to protect it indicated with the familiar TM. Registration at state and federal levels may confer a number of advantages, however. Registering a mark with the federal government, for example, gives the owner exclusive rights nationwide and the right to bring infringement actions in federal court.

Updating the business plan may help secure capital

Start-up companies in Colorado and around the country are renowned for both needing and blowing through large amounts of cash. The needs and uses are typically expected and written into the business plan used to secure seed capital. After the business has significant cash flow, however, owners may forego the formal business plan until a catastrophe strikes, cash flows enter negative territory or owners face some other reason for seeking capital.

There are several reasons why owners need to maintain an up-to-date business plan. Owners of an established business may be interested in growth into new products or markets. This will require specialized knowledge of the market, a timeline for profitability, the costs of expansion and the source of funding. Keeping this data in a business plan format ensures that owners can communicate relevant company information to investors, loan officers and others with a stake in success.

Broker selection tips Denver business sales

For owners looking to sell a Denver business, contracting with a broker could result in a higher price and better terms. Absent unsolicited offers, owners put a lot at stake when they pursue an exit. Word of mouth and other advertising efforts could result in loss of key employees, damage to supplier relationships and a resulting loss in value. The right owner may not even be found in the local market. A business broker can help by matching sellers with motivated buyers.

Choosing the right broker is important to ensuring a transparent process and the most profitable outcome, however. An author on the topic of business sales provides a number of tips to help in the selection. For instance, check the broker's background and standing with the International Business Brokers' Association before signing a contract.

Bank loan alternatives for start-up entrepreneurs

Banks are often the first, but rarely the last, stop for financing a Colorado business start-up. Data presented by an author on the topic shows that bank loans account for less than one-tenth of capital for new companies. Entrepreneurs on the search for money to get their ideas off the ground have a number of other places to look for help.

One of the more popular alternatives to the traditional bank loan is a bank loan funneled through the Small Business Administration. The SBA guarantees a portion of the loan, which means better terms and access for start-up company owners. Funds can be used for commercial real estate transactions, for example. However, a number of conditions apply that may make other sources more attractive.

Startups should be concerned about intellectual property

Colorado entrepreneurs generally try to get their new business ventures up and running as quickly as possible, but this eagerness to bring products or services to market can sometimes lead to important legal issues being overlooked. While new business owners usually take steps to ensure that their insurance coverage is adequate and all of the permits and licenses they need are in place before opening their doors, they often fail to address the important issue of intellectual property.

Copyrights give authors exclusive rights to publish, reproduce and distribute their original works. Copyrights are secured by publication, but entrepreneurs who wish to fully protect themselves against infringement may be wise to register their works with the U.S. Copyright Office. Litigation over intellectual property can be complex, and courts will not hear copyright lawsuits unless the work involved has been registered. Trademarks protect brand identities, and logos, taglines and slogans can be protected by registering them with state and federal authorities.

Why the government should not subsidize venture capital

Entrepreneurs in Colorado may have great ideas for startups that require them to seek venture capital so that they can finance their businesses. In Silicon Valley, for instance, there are a large number of unicorn companies precisely because of the influx of venture capital. The success there has led some governments to try to incentivize venture capital investments by offering subsidies.

China's government has offered tax credits and subsidized venture capital in an effort to quickly grow its economy. The results have been mixed, however. Some of the reasons why government subsidized venture capital has not had the same growth effect are because of the difference between unicorn companies and gazelles. Unicorn companies are focused on increasing their market valuations while gazelles are focused on increasing their annual revenues. Gazelles are those companies that increase their revenues by 20 percent or more per year.

Venture capital withdraws from cleantech boom

Colorado investors many be interested to learn that the deployment of clean energy technology is facing a decline in venture capital deals and funding. The national trend in cleantech funding showed a 30 percent drop in funding over a five-year period ending in 2016, according to a new report from the Brookings Institution. Cleantech is an umbrella term for several sectors, such as solar power and energy storage. The loss of funding for these sectors is hitting new business ventures harder, and some regions are faring much better than others.

The Brookings report on cleantech's access to venture capital found that only 13 percent of total funding went to early-stage companies in 2016. Though the loss is national, a few regions are still seeing significant investments. Companies in San Francisco, Boston, San Jose and Los Angeles are taking over half of the funding pie.

Planning for the worst with a business start-up

Recessionary swings in the economy are an inevitable and unpredictable fact of life, similar to Gulf hurricanes and northeastern snowstorms. Just as with natural disasters, Denver business investors can protect their start-up company assets and future earnings by making plans for the next economic downturn. What works for a business in good times may quickly become a liability, bu there are some ways to prepare for a quick response.

The best time to begin preparing for the worst is when the coffers are flush. One of the actionable goals should be to consider acquisitions or joint ventures that expand current offerings without stepping too far outside the core market. A coffee shop purchasing a similar enterprise makes sense, whereas a move into children's apparel likely introduces too much risk in a recession. Another actionable goal during good times is reducing debt burdens. Paying off a business start-up loan, for instance, will reduce monthly costs by an amount that could become critical in lean times.