High venture capital returns are the price entrepreneurs must pay for access to business resources
When it comes to venture capital, many of those starting a small business are uncomfortable with the fact that investors expect such a large return on investment, especially when they feel it is on the back of their own hard work.
However, Canadian small business owners should remember that this is essentially the price of venture capital, and that they are paying for the help accessing business resources by providing high growth and large returns, wrote entrepreneurship expert Rick Spence in a column for the Financial Post.
"The key thing entrepreneurs should understand about venture capital is it is perfectly legitimate, indeed necessary, for investors to expect to make oodles of money from your idea or company usually by taking a generous share of equity in return for supplying money you can't get anywhere else," he wrote. "You have to buy into the notion they are enabling you to access the potential value your business, products or ideas have yet to create."
However, while venture capital funding is still out there, Canadian small businesses may have to settle for less - according to the Canadian Venture Capital and Private Equity Association, the amount of venture capital investments decreased by 42 percent year-over-year in the second quarter of 2009, while the number of firms receiving funding stayed relatively stable, the Globe and Mail reported.
