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Capital Sources Reveal Easier Path For New Business Success

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Speakers at the recent Venture Shift conference in New York conveyed some details about the current environment for new businesses to raise capital. Among the trends is the lower cost for startup corporations to create and launch products.

Roger Ehrenberg of IA Ventures pointed out, for example, that a new software company no longer requires $30 million to reach full operations. He stated that angel investors funding the $1 million to $1.5 million range are now sufficient to establish growth for many startups. Ehrenberg averred that this level of capital is more prevalent than ever and is solidifying a larger number of enterprises.

When asked about the worst decision he ever made, Ehrenberg professed that investing in great people is critical. Mistakes are averted by investing with highly capable founders in addition to new companies with great ideas and markets. A valuable lesson for any new business seeking capital is assurance that sound experienced management is in place.

David Tisch of TechStars echoed the point. He affirmed the notion that entrepreneurs don’t increase their ability to attract capital by tackling something difficult. A new corporation providing a basic product is just as likely to obtain financial backing as a company facing enormous obstacles. Tisch illustrated the concept by declaring that a new enterprise can succeed even if it simply launches a new web app facing no barrier to entry.

John Borthwick of Betaworks emphasized the importance of starting a business by creating something that solves a problem. He declared that the most important aspects for a new business are low costs and passion, not raising venture capital. Working with angel investors is better because it eases the ability to make adjustments as the scale of the business is developed. Borthwick said that even large established companies have to work hard to maintain their market positions as plenty of new enterprises will emerge.

In summary, a strong new corporation requires good management that creates an environment of innovation. Business growth is more easily scalable today than in the past. Therefore, a little capital goes a long way when the company is operated well.