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New Allies

Family businesses and venture capitalists are finally seeing eye to eye.

In the past few years, family businesses and private investors have begun taking sidelong glances at each other--something they've rarely done before. The reason: They're beginning to need each other.

The good news for family businesses is the investment capital pool is getting deeper, according to Fran├žois de Visscher, president of de Visscher & Co, a Greenwich, Connecticut, company that specializes in finding capital for family-owned businesses. The soaring stock market of the past few years has netted investors sizable profits, which many have harvested. Reluctant to jump back into a pricey market, many investors are looking for new places to put their money. When they look at the numbers, they're finding family businesses may be the answer: At least 2 million family firms in the United States have revenues greater than $1 million, and 31,000 have annual sales topping $25 million.

And their growth shows no sign of slowing. Ideas of change and expansion are motivating second- and third-generation owners now taking over the businesses started by parents and grandparents. They're not as leery of private investors as their forefathers--and they need capital to turn their ideas into reality.

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This article was originally published in the July 1997 print edition of Entrepreneur with the headline: New Allies.

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