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 second quarter total was $170 million, which may appear to compare poorly with the first quarter’s $515.3 million. However, a comparison with 2016 showed that the first half alone has nearly surpassed the total dollar value awarded by investors in Colorado firms in 2016. As in the state, the growth across the nation is seen in a declining number of larger deals. The report found $18.4 billion in capital was delivered over 1,152 deals.
Whether for seed capital, growth of services or product expansion, businesses may need to seek out a source of funding beyond their own cash flow. An updated business plan and proven understanding of the markets, competition and regulation environment can help attract venture capital. Businesses considering pursuit of a new market or product line may find it easier to secure a source of funding in 2017, but investors will still require some evidence of profitability. An attorney experienced in commercial law may help in identifying weaknesses in planning and protecting against legal problems in the quest for growth.