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LOOKING BACK: Thirty years ago, Crain's reported on state government approval of BIDCOs, which would provide alternative funding for new businesses. Mostly, it didn't work. More at crainsdetroit.com/30
On Nov. 25, 1985, Crain's published a story about a Senate committee in Lansing approving a BIDCO, an acronym for business and industrial corporation, whose purpose was to fill the gap in funding for new businesses between banks and venture capitalists.
It was a gap that wouldn't be filled for long or very successfully.
The idea was that young businesses that didn't have pristine credit or top-notch collateral would pay more than bank rates for BIDCO loans but at a cheaper cost than venture capitalists charged for equity investments.
The Legislature approved BIDCOs in 1986. At the time, a typical interest rate for one of their loans was about 20 percent, with BIDCOs also often negotiating a share of revenue or warrants to purchase stock at low prices later as part of their deals.
It was briefly a growth industry. Fifteen BIDCOs were licensed over the next few years, but by 2000, only seven were still in existence, five of them barely hanging on.
Today, there are just two, Asset BIDCO LLC and Onset BIDCO LLC, both run in Lansing by Joseph Reid III, who is president of both.
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