SBA's Venture Capital Program Has Record Year - OPEN Forum

Conventional venture capitalists are writing smaller checks and funding fewer deals these days, but the U.S. Small Business Administration?s venture capital program is growing.?

The program?officially called the Small Business Investment Company debenture program?forked over a record $2.95 billion to 1,094 small businesses in fiscal year 2012, which ended Sept. 30. That?s a 14 percent increase over last year?s $2.59 billion, and an 85 percent increase from 2010, which was also a record year for the program.

The program began in 1958, with the aim of helping businesses in industries and geographic areas not typically served by conventional VC firms. Since its inception, it?s invested approximately $63 billion in some 110,000 small business in the U.S., according to SBA figures. Some notable successes that received SBIC funding in their early days: Apple Computer, Costco, Gymboree, Federal Express, Outback Steakhouse, and Restoration Hardware. (For some other SBIC successes, click here.) The program also suffered some serious losses, hence the decline in financings from 2005 until 2010.?

In fiscal year 2012, the SBA also provided $1.92 billion in loan guarantees to 301 SBICs in 2012. These firms raised $1 billion in private capital, which is then used to invest in small businesses.

The SBA issued 30 new SBIC licenses in 2012, up from 22 the previous year.

?Over the past two years, we?ve made SBIC work better than ever before,? said SBA Administrator Karen Mills in a statement. ?We cut licensing time in half, which has strengthened efficiency and made it possible to get capital into the hands of small businesses more quickly. When an SBIC invests in a company, it can scale up and create jobs.?

This is all good for entrepreneurs, because traditional venture capital firms are not as forthcoming with funding. During the third quarter of 2012, venture capitalists invested $6.5 billion in 890 deals. The total dollar figure is down 11 percent from the previous quarter, according to PriceWaterhouseCoopers and the National Venture Capital Association?and the year?s figures as a whole are expected to be less than those in 2011.

For more on SBIC funding, click here.?

Would you or have you considered seeking SBIC funding??

Source: http://www.openforum.com/articles/sbas-venture-capital-program-has-record-year

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