Economic & Tourism Development

Venture Capital Programs

Posted September 24, 2008

Venture capital is most important in the early stages of a firm's development, after research and development has been conducted and a new product or process is ready to be commercialized. At this point, the business does not have a record and collateral against which conventional financing can be secured. Therefore, venture capital from wealthy individuals or venture capital firms fills a gap between the R&D stage-which may tap funds from the entrepreneur, family, friends, corporations and the government-and the time when the business can issue equities or borrow from banks.

Policy options for enhancing the venture capital industry relate to building an entrepreneurial culture (such as helping to link investors and entrepreneurs), investing or co-investing in venture capital funds, and offering tax incentives for venture capital investments.

Resources on venture capital include:

The National Association of Seed and Venture Funds
The Federal Reserve Bank of Kansas City's Community Affairs Department published a report titled Equity for Rural America: Community Development Venture Capital

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