As many entrepreneurs are unhappily discovering, the stream of venture capital has narrowed in the past several months, and companies and individuals that supply venture capital have employed increasingly stringent examinations of potential investments, given the current economic climate of our markets.
Given the increasing strictness of venture capital investment, now, more than ever, a fundamental question for every new entrepreneur is whether venture capital, or just plain old debt, is the best way to finance a young company in this environment.
Generally, companies receive venture capital through cash infusions in exchange for an equity interest in the company, in the form of either common stock or securities that convert into common stock. Usually this occurs through a private placement of securities using certain exemptions available under the federal and state securities laws. As a result, a company seeking outside financing should evaluate the advantages and disadvantages
