Angel On Board: Challenges Of Early-Stage Funding

Law360, New York (September 8, 2009, 11:44 AM EDT) -- It has become a cliché that capitalism is a process of “creative destruction,” a phrase first coined by the economist Joseph Schumpeter.

While the economic carnage of the current recession clearly demonstrates the “destructive” part of this phrase, turmoil such as this frequently fosters entrepreneurial “creativity,” giving rise to new business ideas and models. But new ideas can only become real businesses if the entrepreneur can get financing.

For example, suppose an entrepreneur wishes to develop a prototype for a new Web-based screening method for identifying...
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