Doron F. Eghbali Business Planning Law Blog on Lawyers.com

Some Businesses Are Left Out of Venture Capitalists' Largess

Tuesday, January 26, 2010 by Doron F. Eghbali

The frozen credit market and dwindling fortunes of family members leave start-up companies with at least one other source of capital funding:venture capitalists. However, even venture capitalists have become more frugal. In fact, by emphasizing capital efficiency, venture capitalists have recently sought to eschew funding some start-ups.

The following is a list of businesses venture capitalists have shown reluctance to advance funding:

Networking Equipment
Telecommunications
Semiconductors
Alternative Fuels

The reason is these areas require large capital outlays. For instance, a company making solar energy cells require tens of millions of dollars to set up expensive manufacturing facilities. Venture capitalists have become more mindful of efficiency. Given the difficulty for venture capitalists to raise or grow their capital, venture capitalists want to invest in businesses where they reduce their risk and increase their reward.

Certainly, business entrepreneurs should know how to approach venture capitalists even if their start-up business does not burn through much cash fast.

_____________

DORON EGHBALI is a Partner at the Beverly Hills Offices of Law Advocate Group, LLP. He Primarily Practices Business, Real Estate and Entertainment Law. He Could be Reached at 310-651-3065 or DoronEghbali@LawAdvocateGroup.com. For More Information, Please, Visit: www.LawAdvocateGroup.com.

Posted at 10:15 AM

Topic: Business Planning