One of the most difficult challenges that people face when starting a business is securing the funds necessary to get it up and moving. Some people can rely on personal savings or a network of friends and family to invest in a startup company, but often times, this is insufficient. In general, it can be necessary for a company to get the funds from an investor who is willing to provide venture capital.
Wealthy investors who are willing to make this type of high-risk investment do not just throw money at every opportunity that comes their way. It often takes a strong business idea, effective business plan and the potential for a high return on the initial investment for many angel investors and venture capital companies to be attracted to an idea.
Unfortunately, last year was a rough one for Colorado businesses in terms of venture capital. According to a recent report, investments by venture capitalists shrank by 9 percent in 2012. The report shows that in 2011, there was about $616 million invested in Colorado and last year that dropped to $560 million. The fourth quarter of last year was a particularly unexciting time for state businesses. According to reports, investments made during this time period decreased by a whopping 50 percent when compared to 2011. This trend was seen nationally as well, with an overall decrease of 9 percent in venture capital invested throughout the country.
Many sources agree that the difficult state of the current economy played a role in this decrease. It is also believed that the uncertainty of the presidential election and the possibility of the so-called fiscal cliff contributed to the decline in investments.
However, sources believe that there is a renewed sense of confidence and motivation in the New Year making it likely that these investments will start climbing again soon. This is good news for startup businesses and companies looking to expand in Colorado. Securing this type of capital funding can be extremely important to the success of a company.
Source: Denver Post, “Venture capital plunges in Colorado in fourth quarter and 2012,” Andy Vuong, Jan. 18, 2013