Banks view the opportunity to invest early as a chance to get involved at a company's growth stage. Then as the business matures, the bank develops into a permanent fixture in its long-term financial planning and strategy. However, the downside for traditional financial institutions is that as publicly traded companies, an abundance of early-stage investments may spook shareholders. Today's financial institutions want to be full-service sources of advice and capital at all stages of evolution and development. Meanwhile venture capital firms, the major source of financing for young companies, have experienced tremendous growth because of the wired world.
Venture capitalists are able to help on a number of levels.
Most of these firms think of themselves as entrepreneurs first and financiers second. The best venture capital businesses take a hands-on role in guiding growth by actively participating in management roles. If a venture capital firm doesn't provide value beyond the financial, then it is not a good match, especially when finding financing can be months of 16-hour days. Across the Midwest, other venture capital firms are concentrating on funding start-ups in Michigan, Ohio, Indiana and Pennsylvania. Indianapolis-based CID Equity Partners has opened offices in both Cincinnati and Columbus.