Who Funds All Those Business Start-Ups?

By Charles H. Green

Laura Entis offers a good article (illustrated with a good infographic) in Entrepreneur.com that details and ranks the many sources of small business start-up financing. EntrepreneurIt’s interesting how different the world really is from how we may perceive to be, so this information will be surprising to some.

Here’s a quick quiz to see the difference between what you think and what really happens in this sector:

1. How many businesses start up each month in the United States?

a. over 250,000
b. over 500,000
c. over 750,000
d. over 1,000,000

2. What’s the average amount of capital raised from any source to start a business?

a. $44,955
b. $132,995
c. $78,406
d. $21,859

3. Which source of start-up funding provides on average the highest amount of capital to fund start-up companies?

a. Friends and family
b. Angel investors
c. SBA lenders
d. Venture capital

4. How do the various funding sources rank, from the largest aggregate funding sources to the smallest?

a. Personal resources, family & friends, angel investors and SBA lenders
b. Venture capital, angel investors, SBA lenders and family & friends
c. SBA lenders, personal resources, venture capital and angel investors
d. Friends & family, SBA lenders, angel investors and personal resources

5. What is the aggregate total of start-up funding raised in the United States annually?

a. $160 billion
b. $1.3 trillion
c. $990 million
d. $531 billion

Check out how your impressions compare to reality: Answers: 1) b 2) c 3) d 4) 5) d

View infographic here.

This entry was posted in AdviceOnLoan
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