10.19.10 by Dov
While apparently the Midwest is overflowing with capital, we at Allos have to confess that it certainly doesn’t look that way from where we stand. Perhaps it’s the difference between early-stage (where we’re looking) and the growth- or expansion-stage markets mentioned in the recent article on PE Hub, but judging by the conversations we’re having with entrepreneurs (not to mention the sheer volume of entrepreneurs we’re talking to), there is nowhere near sufficient capital in the region.
In fact, just last week we had to pass on an investment opportunity in a great company, led by a very strong entrepreneur, and I was in the unfortunate position of having to explain that while we weren’t moving forward, I also couldn’t give him a good reason why. We like the space, the company was demonstrating traction, the leadership team is impressive, and we expected if we moved forward we’d find agreement on the valuation and terms. But when we’re seeing 250 companies or so every year, and we’re making just one or two investments, we have to pass on some great opportunities in the hopes of finding the exceptional.
Is there sufficient capital in the region that this company will get funded? I sure hope so. But I know that whether it’s this particular company or another, there will be strong, viable, early-stage companies in the region that end up out of business because the capital they need to get over the initial hump – to reach the “growth stage” – isn’t there.
Are you an entrepreneur with a story? Tell us about it in the comments.