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Money Buzz 12/03

The state of VC investments in minority-owned firms, the rising cost of audits and accounting, and more

By Jennifer Pellet • Dec 1, 2003

Opinions expressed by Entrepreneur contributors are their own.

Minority Rule
VC investments in minority-owned firms, often considered charitableor public relations endeavors, actually realize competitive yieldsand similar risk levels as those made in mainstream ventures. Sosays the recently released Minorities and Venture Capital,an in-depth study of 24 funds.

"The results suggest that based on levels of returns andrisk, [minority venture] entrepreneurs should be able to seekmainstream financing," says William Bradford, professor offinance and business economics at the University of Washington,Seattle, who partnered with Timothy Bates, professor of economicsat Detroit's Wayne State University, to conduct the study."For the decade ending in 2000, mainstream VC firms earnedrates of return averaging 20 percent-just less than the 24 percentaverage return for the 117 investments made [in minority companies]by participating firms."

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