Entrepreneurs who start businesses in small cities and towns don’t always have access to investment dollars centered in urban places. This limits rural efforts to grow companies and build strong economies. “Venture capital and some form of equity investment into growing businesses are prerequisites for any region hoping to cultivate an entrepreneurial economy,” said Rosalie Sheehy Cates, executive director of Montana Community Development Corporation (MCDC).“
MCDC, with support from a W.K. Kellogg Foundation grant, has developed and launched a $1.5 million “near-equity” capital fund to support rural entrepreneurship in Montana. “Companies in rural areas tend to be smaller and work on a less-than global scale, offering a return on investment that does not meet venture capital levels. These rural companies need equity to fuel growth. They just need equity in lesser amounts and perhaps at lower returns than traditional venture capital requires,” added Cates.
The Montana Fund investments are structured as loans priced at commercial bank rates, but also require payment of a percentage of the company’s sales over the term of the loan. That brings pricing closer-to-venture levels without requiring the company to relinquish ownership.
The grant also supported MCDC in developing new technical assistance for growth companies. MCDC’s in-house Small Business Development Center now dedicates staff time to assisting growth companies.
For more information about MCDC, visit www.mtcdc.org.