As many of you know, high-growth entrepreneurs seek capital from three generally non-competing sources: Friends and family, angel investors and venture capitalists. Friends and family often invest up to $100K in idea-stage companies (no product, no customers). Angel investors provide funding in amounts ranging from $100K to $1 million to companies with at least a prototype product that early-adopter customers have tested and want to purchase. Venture capitalists (VCs) invest $4 million and up to companies with revenues and sometimes for biotech companies for FDA compliance testing.
I have a residence in Montana and have discovered that friends and family and angel investors invest in many companies here. Unfortunately, most venture capitalists will not and have not. During the last decade (2000 – 2009) venture capitalists made only 11 investments in state of Montana. If your Montana company needs substantially more than $1 million in capital to achieve positive cash flow or exit, it is highly unlikely you will find venture capitalist willing to invest here. Here is a list of those investing in the Treasure State:
What’s an entrepreneur to do if he or she needs $4 million or more to commercialize a product (especially a biotech or life science product) in a Montana company? First, get prepared. Then, approach those on our list. But, if your company is not of interest to these fine venture capitalists, then know that you are likely to have to move the company to a location near interested venture capitalists. Sorry…I wish it were not true!