Program ID: Innovation Anthology #326
Program Date: 07/29/2010
Program Category: Economy, Innovation
Venture Capital Funding Changes for Tech Startups
The venture capital industry is changing. And that should be good news for start up technology companies.
That’s the message economist Paul Kedrosky had for people at the recent AVAC meeting in Calgary.
Kedrosky points to lower startup costs for businesses and the appearance of small venture capital funds.
PAUL KEDROSKY: The rise of all of these smaller, I call them super seed or super angel funds, is fantastic for entrepreneurs because what it means is that rather than having only one or two very large funds, where I have to convince one or two of them to give me the money I need, I can now raise it in smaller slices from a host of different people all of whom give me a 100 thousand or 200 thousand dollars. And there’s 5 of them and I raise my million dollars, or whatever I need. In the old days, I had to raise 5 million dollars or 6 million dollars, and there were only a couple of very large funds. And once one or two of them said no, well, that’s it. Lights out. You can’t do anything anymore. Now there’s 25, 30, 50, 100 of these smaller funds floating around out there now. And as a result there’s so much more of a diversity in the base. There’s more places to raise the money. That’s fantastic for entrepreneurs. It just means you just that have to be able to raise it in smaller pieces from a larger range of firms.
According to Paul Kedrosky, the trend toward smaller venture capital funds is also showing up in Canada.
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I’M CHERYL CROUCHER