capital

During a Clean Energy Investment Summit, the White House announced a $4 billion commitment by major foundations, institutional investors, and others to fund innovative solutions to help fight climate change, including technologies with breakthrough potential to reduce carbon pollution. The commitment of $4 billion doubled the initial $2 billion goal set at the launch of the administration’s Clean Energy Investment Initiative last February.

This may be one of the best environments for tech companies to receive funding since the extreme financing figures recorded during the tech boom in 2000, according to a new Small Business Administration (SBA) factsheet. In Q1 of 2015, venture capital (VC) investments totaled $13.4 billion making it the fifth straight quarter to see over $10 billion in VC investments. This trend is part of a sizeable post-recessionary rebound in VC evidencing major growth – VC investments have grown by more than 150% over the last five years. However, this increased VC activity is not benefiting many early stage startups because VCs are shifting away from funding startups as they are just developing. Most VCs are making targeted investments in more mature tech companies in order to potentially jump in before companies go public. The result of this trend of late stage investment by VCs has caused a reduction in the availability of risk capital for promising startups. Read the factsheet…

Kansas City is leaving millions of dollars on the table, funding that could fuel early-stage startups that are the key to creating jobs and economic growth, according to a new report from KCSourceLink and its partners. The report will serve as a roadmap to a new capital initiative led by the Kauffman Foundation; several regional economic and community development organizations; and, other stakeholders in the Kansas City metro region. The new initiative – We Create Capital – aims to increase the availability of microfinance, angel, seed stage, and venture capital for startups by creating better connections between investors, attracting venture capital to the region, and cultivating a deeper talent pool of people to manage venture capital funds. The plan also calls for increasing awareness about available startup funding sources including federal, state, local, and private sources. Read the strategy...

In 2009, only 9.5 percent of venture-backed startups had a female founder, according to a research by CrunchBase. By 2014, that figure had almost doubled, reaching 18 percent. During that period, the absolute number of companies with a female founder quadrupled. More women are also seeking early stage funds. The University of New Hampshire's Center for Venture Research (CVR) reports that more than a third of entrepreneurs seeking angel capital in 2014 were women. Despite this progress, women entrepreneurs remain underrepresented in high-tech entrepreneurship. A recent academic article found that women often have to rely on their technical resumes and personal referrals to overcome the biases of investors.

In 2014, 25 percent of all angel investments supported seed and startup stage businesses, down from 45 percent in 2013, according to the year-end report by the University of New Hampshire's Center for Venture Research. Angels, however, remain a key group in early stage financing, participating in 46 percent of all early stage deals. Angels invested $24.1 billion in 2014, down 2.6 percent from the previous year, though both the number of investors and the number of angel capital recipients had modest increases. Read the full report...

The Canadian Securities Administrators (CSA) announced that securities regulators in five Canadian Provinces have agreed to CSA Notice 45-316 – a common set of rules that will allow startups to raise up to $500,000 CD (approximately $401,600 USD) per year from unaccredited investors via authorized Canadian-based funding portals. With the passage of the new rules, the provinces of British Columbia, Manitoba, Québec, New Brunswick and Nova Scotia join Saskatchewan as provinces that allow non-accredited investors to make equity investments in startups and other small businesses, according to techvibes.com.

Acceleration in angel activity, as described in the most recent Halo Report, is a continuation of a general trend of increased valuations, deal sizes, and activity by angel groups since the start of 2011. Despite this, relatively little attention has been paid to the impacts of these angel groups on the firms in which they invest. Research by Harvard Business School Professors William Kerr and Josh Lerner, alongside MIT Professor Antoinette Schoar, expands on the entrepreneurial finance literature by drawing empirical evidence on the impacts of angel investments. Using a variety of econometric techniques, the authors find consistent evidence that investments by angel groups are associated with improved likelihood of survival for four or more years, higher levels of employment, and more traffic on firm websites. The authors also find limited evidence that financing by angel groups helps firms achieve successful exits and reach high employment levels.

Many promising technologies created by Oregon startups wither on the vine due to a shortage of high-risk angel capital and many other startups leave the state in search of funding, according to a new report from the Technology Association of Oregon (TAO) – Oregon Angel Investment: The Economic Impact of High-Risk Investment in Oregon's Entrepreneurial Enterprises. The authors highlight the rapidly growing entrepreneurial ecosystem that includes a growing number of willing, talented entrepreneurs and entrepreneurial support organizations (e.g., incubators, accelerators). However, the state still lags significantly behind other areas of the country in terms of actual dollars invested, as well as the number of high-risk investment deals that are made.

Two private venture firms have committed to raising a total of $125 million to invest in rural, early stage startups under the Department of Agriculture's Rural Business Investment Program. The program was launched last April, when Advantage Capital Partners launched the first $150 million Rural Business Investment Company (RBIC) fund. Two new RBIC funds are now being raised by Innovation Memphis ($25 million) and Meritus Kirchner Capital ($100 million) to make targeting equity investments in rural businesses with high-growth potential. Learn more...

State Treasurer Janet Cowell announced a second North Carolina Innovation Fund (NCIF), a $250 million commitment to North Carolina-centered companies. Approximately $165 million will be designated to make co-investments in growth stage companies with the potential for a risk-adjusted, high return on investment (ROI) – 20 percent ROI. The second NCIF will make targeted investments into a diverse set of industries that include key sector identified by the state as growth sectors. The remaining funds, approximately $83 million, will have a multi-stage investment focus (e.g., venture, growth, buyout, and mezzanine funding), according to the Triangle Business Journal. The fund will be managed by the Charlotte office of Grosvenor Capital Management – an independent alternative asset management firm – and should start making investments within the coming months.