Canadian small business startup funds fall
Entrepreneurs starting a small business should be prepared to get creative in looking for startup funds.
According to a report from Canada's Venture Capital & Private Equity Association, the venture capital market fell to $1 billion in 2009 - down by 27 percent from 2008. This is the lowest level the market has seen since the 1990s.
The number of venture capital-backed entrepreneurial firms in Canada also fell. Just 331 companies were financed by venture capitalists last year as opposed to 388 in 2008. Moreover, the average amount invested per company in 2009 was $3.1 million. This shows a dramatic decline from 2007, when companies received $5.1 million on average in venture capital investments.
Entrepreneurs who struggle to find funds from venture capitalists might consider taking investments from friends and family.
Inc. magazine says small business owners can structure these finances as convertible debt. This protects loved ones from major financial loss should stock become diluted as the company grows, and it looks savvy to venture capitalists who might be future investors.
