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Entrepreneur-friendly business climate?
By Dan McCue
Staff Writer
Creating a business climate friendly for entrepreneurs is an important component of the Angelou Report. The reality, however, is that very few businesses can get started on their own.
As a result, among the big questions that have to be answered as the economic development strategy is implemented is: What are the possible sources of money for these startups? And, what are investors looking for in a company they might invest in?
An obvious potential source of startup money would be banks, but banks have a few drawbacks for a true startup, said Dr. John E. Clarkin, Director of the College of Charleston Tate Center for Entrepreneurship.
First, an entrepreneur will need collateral, something that may be in short supply, and an ability to make regular payments, something that may also initially be difficult if the early history of Silicon Valley is any guide.
There is another route: Exploring the possibilities of angel or venture capitol, a subject that has been the hot topic at a series of informal gatherings held at the Tate Center in recent weeks.
Angel investors are wealthy current and former business owners motivated not by philanthropy, but by the desire to achieve a significant return on their investments in entrepreneurial companies.
Most institutional investors and venture capitalists put their money into expanding businesses that are already proven winners.
Angels, on the other hand, are more willing to invest in startups they deem good prospects, but that may not have already achieved profitability.
The main thing angels and venture capitalists are looking for is an exit strategy for the investment.
“They may not understand the technology, if you’re a high tech startup, but they can tell if you know what you’re doing, if you have the right team on board, and if you have a compelling value set,” Clarkin said.
“Entrepreneurship is a vital part of any economy, whether you’re talking about business clusters or not, because entrepreneurs create jobs,” he added. “In Charleston, we have some of the brightest students in the nation. But if there’s nowhere for them to work, they contribute to someone else’s economy, not ours,” he said.
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