Forums: Discussions for entrepreneurs and small business.

Hi Manuel,

I believe the general idea of providing an entrepreneur or small business owner with government grants, subsidized financing, and/or government backed loans is to help business owners take their businesses to next level where it (i) has built assets based on which it can secure traditional bank loans or (ii) attract formal and more substantial equity financing, or (iii) has been cash flow positive and thus been able to sustain itself through day-to-day operations.

You are correct that your ability to negotiate venture capital investments depends on a variety of different factors, including but not limited to the nature of your business, the competitive landscape in your industry, potential barriers of entry for new competitors, potential unfair advantages your company possess to secure your market position, senior management qualifications, and the actual term sheet.

Since your ability to buy back shares from investors is highly uncertain and subject to interpretation, I won’t VCs expect to go for it. They usually have their own ideas of a viable exit scenario, which is usually a merger, an acquisition or an IPO.

I hope this helps.


Mark





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Jackson Steiner
http://www.JacksonSteiner.com

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