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Social Networking Meets Investing: How Investors are Using the Web to Find Entrepreneurs

March 21, 2011 in Articles | MARTIN WREN, P.C. | LEAVE A COMMENT

Greg Johnson recently wrote here about some of the financing options available for investors seeking to purchase an existing business.  Greg noted that money is tight in the current economy and investors have been forced to seek alternative financing to make purchases.

As reported by the New York Times here, however, private equity financing does not appear as limited at this time.  This is at least in part to the efforts of the the creator of Angelist, a matchmaking website of sorts for investors and internet start-ups.  The site, which selects entrepreneurs and investors and allows them to interact on the web, seeks to modernize the investment process by removing the obstacles inherent in brick and mortar networking.  Some complain that it will overheat the investing market for these start-ups, while small-business advocates laud the site for creating jobs and wealth.

While it is certainly possible that this mode of investing could have a bubble effect on the start-up market, the investors involved here should be more savvy than the speculators responsible for the Dot-com bubble, and the limited size of this market will help prevent unreasonable business valuations.  Market efficiency is a good thing, and this will hopefully help entrepreneurs with great ideas get their creations before the right investors.

Robert E. Byrne, Jr., the author of this post, is an attorney with the Charlottesville, Virginia law firm of MartinWren, P.C.  Bob practices throughout Central Virginia in commercial and business litigation with an emphasis on intellectual property litigation, and he also represents plaintiffs in the Charlottesville Personal Injury Lawyers group.  In addition, Bob advises emerging growth start-up companies.

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