A Secret Stash of Small Biz Capital

Small Business Investment Companies (SBICs) are one of the best-kept secrets in the world of venture capital.  These behind-the-scenes investment firms inject over a billion dollars annually into small firms. Yet they deliberately keep a low profile to avoid being crushed by businesses seeking money.

Last year alone, SBICs across the country pumped about $1.8 billion into 1,477 small companies.  Nearly 25 percent of that investment capital went to businesses that were less than two years old – firms that often need capital in the critical $250,000 to $5 million range that’s often not available through banks or private equity.

Some of America’s biggest and best-known brands got an early boost from SBIC money, including Apple Computers, Costco, FedEx, Intel, Jenny Craig, Outback Steakhouse, Staples and many more.

SBICs combine private capital with government sponsorship and are 100 percent devoted to small business. They often specialize, investing in firms by type, region, industry or other factors, and unlike most venture capital firms, SBICs invest for the long term.

New SBICs are being formed all the time.  New York-based Hudson Ferry Capital (HFC), for example, just launched a new $100 million SBIC to make “buy-in” investments in family-owned U.S. businesses. Tim Ross, an HFC Partner, defines buy-ins as “control investments with existing managers who retain substantial ownership positions; thus creating a common goal to transform a small or regional business into a large, integrated enterprise with much greater value.”  HFC has invested in 27 companies in industries such as manufacturing, building products and business services.

Best place to find SBICs and learn more about the program is the National Association of Small Business Investment Companies (NASBIC) website.

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Filed Under: AngelsBizFinance

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About the Author: Daniel Kehrer, Founder and Chief Content Officer of BizBest Media, is a senior-level leader in digital media, content development and online marketing with special expertise in startups, SMB, social media and generating traffic, engagement and leads. He holds an MBA from UCLA/Anderson and is a passionate entrepreneur (started 4 businesses), syndicated columnist, blogger, thought leader and author of 7 business and financial books.

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