Obtaining financing to create a California LLC typically means entrepreneurs must entice venture capitalist firms, but recent trends are shifting toward angel investors who are focused more on short-term gains, which is causing business owners to "think small."
Many entrepreneurs are looking for a "get rich quick" idea that they can sell quickly to a large company. However, Michael Arrington writes in TechCrunch that this means fewer business owners are establishing new, long-lasting companies - especially in the information technology field.
"Some venture capitalists think that this ''think small'' attitude is driving entrepreneurs who may otherwise build the next Google or Microsoft to create something much less interesting instead, and then everyone loses," writes Arrington. "No IPO. No 20,000 tech jobs. No new buyer out there for the startups that don''t quite make it."
VC firms say that without taking big risks, the entrepreneur misses on the big payoffs. The overall effect is to reduce innovation and growth.
The rise of angel investors may be having an impact on the big firms. Compared to banks, a larger percentage of VC firms have failed during the recession, which could mean less available capital for innovative startups that don''t have the "traditional" qualifications for financing.
Tags : az, c corp, ca, financial management, llc, lp, ny, s corp, small business management, tx
Posted: Sep 2nd, 2010