Milestones or stumbling blocks?
Embarking on a quest for a second round of venture financing in late December, Russ Garcia, an Irvine, Calif., entrepreneur, agonized over an offer. The venture fund would fork out the money if his startup, which makes global-positioning satellite chipsets, met certain goals. The pricing was on a sliding scale upward if the goals were met, downward if they weren't.
Fearing that the terms were too stringent, Garcia rejected that first offer. But when u-Nav Microelectronics Corp. finally lined up alternative financing in August, it too, had a milestone structure. It was the only option, Garcia concluded.
"If you can have all the money upfront, obviously that would be preferable because you'd have a lot more flexibility that way," Garcia says. "But if you're looking for funding right now, it's kind of a way of life."
Across the parched early-stage financing landscape, investors are rationing out capital to starving companies in......
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