2008 and 2009 will go down in history as two of the worst years ever to raise capital for starting or growing a business. Not only did the country go into a recession, but most VC and private equity money all but disappeared. All I can say is I am glad it is 2010.
Equity investments into companies have started again. There have even been a few initial public offerings this year. Inc Magazine published an article recently on where VCs are putting their money. It was interesting to note that many of the hot segments relate well to the Des Moines and central Iowa areas. Here are the top areas they listed in order:
- Information Technology
- Medical and Health
- Clean technology
Here’s a final note worth considering. Inc. indicates that there is a real aversion to risk right now as many of the VCs are putting money in later-stage and expansion companies. Only 21% of the monies invested went into early-stage companies, and start-up / seed companies attracted only 9% of the investments.
As you form your plans to start or expand your company through an equity raise, keep in mind what the VCs and other private equity people are searching for. A proven model with low risk. Isn’t that what bankers used to look for?