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Startups opting to keep VCs out of equation … Venture Capital Remains Scarce for Start-ups

May 6, 2005 /

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Less early-stage seed money means more companies must rely on themselves to get their products to market and many wouldn’t have it any other way.

Bootstrapping, as it’s commonly called, is becoming more prevalent as venture capital levels remain depressed and angel investors lick their wounds from the last bust.

Family, friends, banks, tax credits and small governmental funding programs all serve to get the ball rolling, but as research and development plods on, money becomes scarce and struggling organizations have to find other ways to keep going.

Lori O’Neill, a partner at Deloitte & Touche LLP, said she sees a trend.

"There are more companies bootstrapping now. Will it continue is the question. I think that in the short term it’ll stay like this because there’s less early-stage seed money and some companies don’t want to go that way in the first place. They’re either not ready yet or they want to develop their technology before going down the path for VC money."

By Ottawa Business Journal Staff

Full Story: http://www.ottawabusinessjournal.com/283223445327966.php

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Venture Capital Remains Scarce for Start-ups

Experts disagree on whether start-ups will fare better in the future.

By: Max Chafkin

Venture capital investment remained largely unchanged in the first quarter of 2005, according to a survey released last week.

The PricewaterhouseCoopers/Thomas Venture Economics/National Venture Capital Association MoneyTree Survey found that venture capitalists invested $4.6 billion in U.S. companies last quarter. While this represents a downturn from Q4 2004 investment — $5.9 billion — the survey’s authors do not believe that it indicates any long-term trend.

Mark Heesen, president of the National Venture Capital Association (NVCA), said that the first quarter data falls within the "RIPE zone" — rational, investable, performance-driven, equilibrium — of $4-6 billion, where it has been for the last four years.

But funding to start-ups and companies in the early stages of development remains stagnant, as firms continue to invest heavily in more developed companies.

Full Story: http://www.inc.com/criticalnews/articles/200505/capital.html