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Venture Capital Isn't For Every Small Business Owner

Written by Jenna Weiner
Published: 6/17/2010

Taking in venture capital is appealing to some small business owners, but other don't like the strings that come with it.

Many growing small businesses turn to venture capital investment to grow their company once it has hatched beyond the startup stages. But the consequences of venture capital investment mean that the process isn't right for every small business owner, according to the Wall Street Journal.

Entrepreneur Money Stack

The Journal reports that venture capital is generally a significant amount of money - many millions of dollars doled out over years, and is generally only given to companies that have already established themselves.

Because the amount of money is so large, when venture capitalists invest in a company they also expect to take a very active role in the company's operations, which may be news for small business owners. The paper says investors may decide to put their own people in leadership roles to give them control of their investment - a level of authority that some may not enjoy.

Other small business owners told the paper that they didn't mind the outside oversight because the cash investment helped them bring their companies to the next level.

For companies still seeking early-stage or seed funding, a traditional bank loan or angel investment may be more attainable. Despite the recession, the Center for Venture Research says that angel investors increased the amount of money they pumped into emerging businesses last year - funding more than 57,000 small business projects.

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