RESEARCH TRIANGLE PARK — More and more entrepreneurs apparently are writing off venture capital as a means of getting financing.

And North Carolina’s reputation as a good place to start a business is taking a hit.

Those are two of the more interesting findings of a Council for Entrepreneurial Development survey released today in advance of its annual “Money & Markets” event next Friday.

Given a variety of choices for financing, nearly half of respondents who are involved in information technology said financing based on revenue is the most viable option. Other responses were divided between venture capital and partnerships.

On the biotech side, according to CED, respondents were “spread fairly evenly” among the three categories. That makes sense. The biotech startups more and more are turning to big brothers to help market and sell drugs they invent and get through clinical trial.

Tough terms to meet

Overall, some 40 percent of the entrepreneurs said revenue financing is the “most realtistic” funding option. And 47.2 percent said the “time horizon” to close a deal ranged from six months to a year.

As for the terms set by investors for making a deal, the entrepreneurs cited what has become the standard list on almost equal terms:

  • Experienced management
  • Sustainable business model
  • Profitability
  • Revenue growth

Quite a list, eh?

Venture capital investing fell in 2002 to its lowest level since 1997. Especially hard hit were seed rounds and first-round deals. So what are the alternatives? That’s a key topic speakers will discuss at Money & Markets.

Losing entrepreneurial spirit?

Financing is a worldwide challenge, though. The response most intriguing to me was entrepreneurs’ attitude about North Carolina as a place to start a business.

As the CED pointed out, while 76 percent of those responding said the Old North State is a “fair or better than fair” place to hang a shingle, 85 percent of the same group said other states had a “fair or better” climate.

Now how could people ever think that?

Budget crisis? Public schools? Legislative gridlock? Taxes?

Other findings as reported by the CED include:

  • Closing the new sale is the biggest challenge
  • Next is securing financing
  • Managing “burn” is third

“Closing the new sale” is another reflection of the changing environment for startups. Bootstrap, get the product to market, get a few early adopters, and then look to grow. That may not be as flashy as $40 million VC launches with the hiring of scads of people and buying commercial spots for the Super Bowl. But it certainly is more realistic.

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Rick Smith is managing editor of Local Tech Wire.