Coffee Break Chat

Tech seed money was scarce in 2009

Start-up money for new technology companies often comes from venture capitalists.

In 2009, not so much.

And some people, according to an article in the New York Times, say that's a good thing.

Overall in 2009 in terms of venture capital investment, according to statistics cited by the Times, venture capitalists invested $17.7 billion in 2,795 start-ups. That's 37 percent less cash and 30 percent fewer deals than in 2008. But Internet companies took the largest decline as investments declined 39 percent.

The one exception was Twitter, which raised $100 million in venture capital and was one of the 10 biggest deals overall in 2009.

“There was too much money in the system,” Jeff Fagnan, a partner at the investment firm Atlas Venture, said to the Times. “It would be healthier if we can return to the pace and kind of deals that were done in the 1990s.”

As in before the huge investments into tech companies and the resulting dot com bust that left many reeling.

While some believe that the slowly improving economy will mean greater venture capital investment, others believe the overall slowdown will continue in 2010.

On-line businesses can look for ways to cut costs

Some old and new entrepreneurs are deciding to do business completely online.  This 2009 article from the Arizona Small Business Development Center pinpoints some ways that those who sell online can cut their own costs and be more efficient. One recommendation for those thinking of going totally online is to learn how to design and build websites to avoid the cost of hiring web designers or developers. Other tips are to not buy in bulk, but to use a “drop shipper” to use when orders are to be fulfilled. Check the full article here.

Rise in home-based businesses expected to continue in struggling economy

Home-based businesses have been on the rise for some time and now account for nearly half of all businesses in the United States, according to this article. These businesses are not just hobbies, but are providing a significant or majority share of household income. With a struggling economy, technological advancements and the lower costs of operating out of one’s home, it’s expected that more and more people will choose self-employment at home.

The article identifies 10 trends for home-based entrepreneurs in 2010: 1. A job-challenged economy 2. Bootstrapping (cost containment; cash flow adjustments) 3. Home-based artisans 4. Cloud computing (access to advanced computer capabilities) 5. Mobile computing 6. Social computing 7. Analytics—Tools are becoming more sophisticated; easier to use 8. The New Local movement 9. Boomers—Aging baby boomers are flocking to home-based businesses 10. Work/life balance.

Are you home-based or planning to be?

Write us with your comments using the “comment” feature just below.

Access to financing key to small business growth

Small businesses needs access to financing. That's the key message delivered to President Barack Obama in a Nov. 3 report from the Small Business Financing Forum held earlier in November host by Small Business Administration’s Karen Mills and Treasury Secretary Timothy Geithner.

"With financial institutions tightening lending standards in this recent economic crisis, the small businesses that depend on them for credit have been hit particularly hard.," the report said. "We remain committed to working with Congress and the small business and lending communities to do more to help ensure that much-needed credit is flowing in a responsible way so that small businesses can once again lead the country out of recession and back to prosperity."

Attending the forum were large and small banks, micro-lenders and small business representatives who discussed the current lack of credit for the small business community.

The full report to the president (in PDF format) is available here. You can watch the forum in its entirety here: http://www.sba.gov/smallbusinessforum/index.html

Access to financing continues to be a major issue as the economy and country seeks to fully lift itself out of the recession. According to a Wall Street Journal story, a key provision in past stimulus legislation that was aimed at easing the credit crunch is running out of funds. The funds encouraged hundreds of banks to return to small-business lending, but those funds may now be depleted by the end of December.

The Obama White House has a plan that allows community banks to tap more stimulus funds for small-business lending and increases ceilings on SBA loans. But the problem, according to the Journal article, is that there isn't enough overlap between when the stimulus measures end and when the president’s new plan – scheduled to roll out by the end of the year – kicks in. Advocates worry that there could be a lag of several weeks to a few months.

Obama focus turns to small business lending

President Barack Obama is shifting some of his bailout initiatives to small business.

In a speech Wednesday, the president proposed legislation to increase the maximum size of certain Small Business Administration loans. He also called for new steps to provide lower-cost capital to community banks.

He's hearing the message that small business entrepreneurs often can't get financing from banks.

" ... to spur lending to small businesses, it's essential that we make more credit available to the smaller banks and community financial institutions that these businesses depend on," he said.

Also, here's a Wall Street Journal story that outlines the president's proposals in more detail.

 

Speed Venture Summit coming to Nashua October 28

Speed Venture Summit is coming to the Crowne Plaza in Nashua October 28, featuring some 300 entrepreneurs and investors.  The event is designed to link capital and businesses easily, in a "speed dating" type of format.  Companies are given a chance to pitch investors and the investors, by the end of the afternoon, choose the top five who will get to pitch again. The pitching session is already closed--companies had to register very early for that opportunity--but  anyone who registers to attend the evening reception can meet the companies and investors who particpated.

Register by October 26 to get in for $40 rather than $50 at the door.

Visit the Speed Venture website to register or for more information.  

Deadline Sept. 15 for making your pitch at the NH Speed Venture Summit Oct. 28

Any business looking for growth capital should consider attending the Speed Venture Summit(TM), 2 to 5 p.m., October 28 at the Crown Plaza Hotel in Nashua.  This "speed dating" style event allows businesses or potential businesses to present their business plan to several would-be investors all in one afternoon. Registrants can meet one-on-one with up to six investors.  After each pitch a business makes, the investor offers feedback and the pitch can be refined before the next meeting. At the end of the event, the investors will select the top five companies who presented and these five will participate in a "pitch-off." The best pitch will be selected as the Speed Venture Summit(TM) Company of the year. To participate, businesses must apply by September 15. See more details here. 

The event is sponsored by the NH High Technology Council and the New Hampshire Small Business Development Center (that's us). 

Office of Advocacy releases report on small business financing trends

Access to credit has always been an important topic for small business owners, but perhaps never more so since the collapse of the financial institutions last fall and the concurrent credit problems. A report released recently, “Small Business Focus: Finance” shows data from more than 4,000 businesses in 2003 and, though the data may now seem outdated, it may well be instructive as to what the future holds.  The report is a compendium of a number of studies and papers that examine such things as the rise in importance of large financial institutions and an overview of small business financing patterns, including the relative importance of banks, thrifts, and finance companies in these markets.

You can see this report here and the full studies that were summarized for this report appear here.

ARC emergency loans for small businesses now available

By now we hope you’ve heard of the emergency small business loans that became available in mid-June to help struggling businesses with debt relief. Lenders approved 72 such loans in the program’s first week of operation. The program, called ARC, allows businesses to apply for loans up to $35,000 to cover existing debt if the business has been harmed by the current recession but has otherwise been profitable in one of the last two years. The loans are interest-free for the first year. They are administered by banks and other lenders and guaranteed by the Small Business Administration. Some 10,000 businesses may be helped by the program by the time it ends in 2010.