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Running Dry

If funding for small business investment companies dries up, who will suffer?

This story appears in the August 2005 issue of Entrepreneur. Subscribe »

Maria Cirino was on the second round of fundraising for her Waltham, Massachusetts-based information security service company, Guardent Inc., when her capital search led her to Boston-based Axxon Capital. A Small Business Investment Company, or SBIC, Axxon uses its own capital, plus funds borrowed from the federal government, to provide equity capital to entrepreneurs outside traditional investment circles.

Though Cirino had already experienced success with mainstream investors--she raised $25 million in her first fundraising round--she was so impressed with Axxon's extensive contact network that she included the SBIC in her subsequent, $5 million round of financing. It was also important to Cirino that Axxon focused on investing in women- and minority-owned companies. "There is too little focus on helping women and minorities start companies," says Cirino, whose business was eventually purchased by VeriSign Inc., an infrastructure and security services provider in Mountain View, California.

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