According to the latest PricewaterhouseCoopers/National Venture Capital Association MoneyTree report, venture capital (VC) investments in the first half of 2009 are 55% lower than the same period in 2008, falling from $15.2 billion to $6.8 billion. To be sure, $6.8 billion is still a substantial sum of money, but the decrease in funding from venture capital firms means increased competition for every dollar in an financial environment that is already unfriendly to new investments. As banks have reduced or eliminated companies’ credit lines and are unwilling to provide other forms of financing, entrepreneurs are now forced to look for more-creative ways to fund their operations. Venture capital funding, where investors provide financing to begin operations, support ongoing growth, and foster development of new ideas, is an increasingly appealing option for small businesses impacted by the recession. Whereas entrepreneurs may have previously resisted relinquishing any amount of control over their companies (see below) in exchange for operating capital, some organizations now find that they have no other choice if they are to survive.
Every year, various amounts embodied in the Internal Revenue Code are adjusted to reflect the increase in consumer prices, or inflation, as measured by the Consumer Price Index (CPI). Compiled by the Bureau of Labor Statistics (http://www.bls.gov/CPI/), the index reflects the increase in individuals’ cost of living over time and is used by various government agencies to ensure that their programs accurately reflect current economic conditions. In the case of the Internal Revenue Service, tax rates, deductions, and various thresholds are adjusted annually for inflation, while the Social Security Administration (SSA) uses CPI to adjust benefit amounts paid to recipients. As CPI for 2009 will likely show a drop in overall consumer prices (deflation), many amounts tied to CPI will either remain unchanged or decrease in 2010.