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Increasingly tough times for venture capitalists

Many Colorado residents are aware that it's never been tougher to operate as a venture capitalist firm. Lots of new opportunity seekers means more competition in chasing good ideas, and the ever-increasing difficulties are widely apparent to both new and veteran investors.

A mid-year report from Fenwick and West found that 2017 is on track for the highest number of new funds formed in more than 10 years. With more financing options available, these new funds will create massive competition to get in on the ground floor of the best deals. The report also noted that even though opportunity will be greater, there will be less money offered for investment compared to 2016.

Venture capitalists will also find investment terms are not as advantageous as they have been in the past. This is due to founders looking for greater rewards and simpler term requirements. In the past, venture capitalists enjoyed deals that were constructed to give them greater financial payouts when companies went public without having to invest large amounts of money over time. Without these investor-friendly terms, capitalists will be required to invest larger sums of money over extended periods of time.

A professor from the University of San Francisco who studies venture capitalist confidence trends has identified a sort of general malaise in the investment industry. He determined that general investor confidence had dropped on a scale of 1 to 5 to 3.52. This is below the lifetime average of 3.72. Factors believed to have affected the level of confidence are political uncertainty, immigration law changes and the rising cost of living.

Investing as a venture capitalist or starting a business opportunity of your own is a tremendous decision that can have serious financial implications if not executed correctly. An attorney with experience in commercial and business law could be a great asset in creating a business plan, providing legal guidance and helping avoid many of the mistakes that happen to potential investors.

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