Private Sources of Funds
Venture Capital Firms
Venture capital firms provide equity capital to emerging and growth-oriented businesses that have high market potential. Their major function is to assess management ability, determine market potential and provide equity capital to businesses evidencing growth potential and anticipated high returns of venture investments. The listing of major venture capital firms in Minnesota can be found at your local business library.
Minnesota Initiative Funds
Minnesota initiative funds are charitable, private non-profit organizations funded with a McKnight Foundation allocation supplemented with funds from various public and private sources. Funds are distributed in grants and loans for human services, economic and business development, education, leadership development, health, community services and administration. The six initiative funds are separate entities and each has its own programs, funding levels and guidelines. Four of the six initiative funds (Northwest, Northeast, Central and Southwest) now refer to themselves as Foundations, which they feel more accurately describes their functions.
Community/Economic Development Corporations
Community Development Corporations (CDCs) are privately owned community development agencies serving a predefined geographic area. CDCs are usually organized as non-profit corporations in order to obtain funds from sources interested in economic development such as federal or state governments. CDCs address the development needs of a geographically defined area and investment emphasis will vary by locality. The one requirement for a CDC investment is that the venture be located in the community being served. Examples of programs operated by CDCs include economic and business development programs, including programs that provide financial and other assistance to start, expand, or locate businesses in or near the areas served so as to provide employment and ownership opportunities for residents of such areas; community development and housing activities that create new training, employment and ownership opportunities and which contribute to improved living conditions; and manpower training programs. Most CDCs can assist new or expanding businesses in developing a business plan, management or financial plans including assistance in qualifying for a loan, putting the paperwork together and presenting a proposal to a financial institution.
Information on Community/Economic Development Corporations can be obtained from the Minnesota Department of Employment and Economic Development.
CREDITS: This is an excerpt from A Guide to Starting a Business in Minnesota, provided by the Minnesota Department of Employment and Economic Development, Small Business Assistance Office, Twenty-eighth Edition, January 2010, written by Charles A. Schaffer, Madeline Harris, and Mark Simmer. Copies are available without charge from the Minnesota Department of Employment and Economic Development, Small Business Assistance Office.