A Model of Community–Based Venture Capital Formation To Fund Early–Stage Technology–Based Firms

Howard Van auken

Journal of Small Business Management, 2002, vol. 40, issue 4, 287-301

Abstract: This paper suggests a model of capital formation that concurrently establishes a mechanism to fund early–stage technology–based firms and meets the economic development needs of rural communities. Investors in a community capital investment fund can gain high rates of return on investment while firms realize all of the benefits associated with the investment, community support, and expanded network. The model includes factors associated with the community environment (community–based factors that impact community members’ participation) and external support environment (factors that facilitate the accumulation of investment capital within a community). The result of a community effort can be an environment in which members of the community contribute to an investment fund, cooperate in attracting firms, and provide networking assistance to new business owners. Communities benefit through job creation and economic stability. Community members benefit through wealth creation.

Date: 2002
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DOI: 10.1111/1540-627X.00058

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