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are governmental or quasi-governmental agencies that lend and invest in companies that locate in their communities. They are often affiliated with a local municipality or economic development agency. CDCs review investments and conduct due diligence as other investors do. But because of their interest in community development, they often consider factors that do not interest traditional venture capitalists, such as the employment opportunities and tax revenues the proposed business will generate for the community. Businesses that meet a community need can sometimes secure funding from a CDC when other investors might not be interested. And the funding they secure is sometimes at lower rates and for longer terms than other sources will provide. This is because of the special investment criteria CDCs have relating to job and tax generation, which enable them to justify lower returns on investment and longer-term loans. See: BDCs (Business Development Corporations), Corporate Venture Capital, Due Diligence, ROI (Return on Investment), Venture Capitalists. |
