Capital Raising

Capital Raising

Starting a business online is “normaly” a lot less costly, but if you start “on the street”, you need to be able to buy materials, have a local, hire staff… and so much more, plus you already have to pay for your own life (:P). So unless are wealthy – because you worked sooo hard or because your inherited – not a whole lot of people can support a startup.

I know I will be needing some sort of funding for my business soon enough, and that’s just a fact of life for me. But life is good so, everything happens for a reason

Just throwing my 2 cents in here

@Ross – Am pretty sure your mom likes it more than I do though, because moms always like it more than anybody else. Hehe!

@fredK – I’d invest in you, but I don’t have enough income ATM.

But – let’s remember that angel and VC investment is not the only option for entrepreneurs. Family and friends, bank loans, etc. present other options. And perhaps we’re too broadly stretching the term entrepreneur. I don’t know where I end up on this issue, but is anyone who starts a business an entrepreneur, or does “entrepreneur” mean something a bit more specific?

Since most businesses fail within one year, I think that the phrase “many” is pretty accurate. Many businesses fail because they are unable to secure funding. Others fail for different reasons, of course. But the reality is that few are fortunate to self-fund, especially in the technology space. It’s really great of you to provide links to your industry states – very interesting information there.

But – let’s remember that angel and VC investment is not the only option for entrepreneurs. Family and friends, bank loans, etc. present other options. And perhaps we’re too broadly stretching the term entrepreneur. I don’t know where I end up on this issue, but is anyone who starts a business an entrepreneur, or does “entrepreneur” mean something a bit more specific?

Since most businesses fail within one year, I think that the phrase “many” is pretty accurate. Many businesses fail because they are unable to secure funding. Others fail for different reasons, of course. But the reality is that few are fortunate to self-fund, especially in the technology space. It’s really great of you to provide links to your industry states – very interesting information there.

@Angels Den Co UK – good advice. One reason we succeeded in converting a large percentage of the people we spoke with into investors was our transparency. We were very clear to say that most start-ups fail and that there was a high probability they would loose all of their money. We were very clear to say that we were building a company to operate for a long time, not to have a quick sale. We wanted to make sure their goals and tolerance for risk were aligned with ours.

@Angels Den Co UK – good advice. One reason we succeeded in converting a large percentage of the people we spoke with into investors was our transparency. We were very clear to say that most start-ups fail and that there was a high probability they would loose all of their money. We were very clear to say that we were building a company to operate for a long time, not to have a quick sale. We wanted to make sure their goals and tolerance for risk were aligned with ours.

I take issue with that. I am from a family of self made entrepreneurs and I work for a successful startup (Angelsoft, LLC which provides the standardized software platform 80% of the worlds Angel Investor Groups and several dozen Venture Capital firms use to manage their deal flow and syndicate the best deals with one another).

Fact: Approximately 600,000 new companies are started each year in the US according to the United States Small Business Administration. http://www.sba.gov/idc/groups/public/documents/sba_homepage/tools_podcast_entrepreneurtran.doc

Fuzzy fact: Approximately 50,000 startups receive angel funding annually; http://www.wsbe.unh.edu/files/2007%20Media%20Release%20-%20Lori%20Wright.pdf

and only 3,000-4,000 get Venture Capital funding each year according to the National Venture Capital Association http://www.marketwire.com/press-release/National-Venture-Capital-Association-812261.html

54,000 is nowhere near “most” of 600,000. It is the overwhelming majority of entrepreneurs that never receive equity investment. This misconception is rampant on the internet however and largely skewed by the high tech nature of the internet and those who blog in the entrepreneurial world that causes this misconception. It certainly is true that more high tech entrepreneurs need outside funding due to the nature of their industry and potential growth rate.

However, I think we should be clear that most entrepreneurs do not need nor should they want angel or VC investment.

We see it everyday on Angelsoft. The wrong type of company is looking for the wrong type of financing. Check our industry stats at https://www.angelsoft.net/industry/index.seam. You’ll see that 1.32 % of all companies actively looking for funding actually receive it. These stats are pulled directly (in real time) from our platform of over 415 VCs and angel groups, representing over 11,000 accredited investors true deal flow numbers.

Best,
Ryan Pipkin
Senior Account Executive
Angelsoft, LLC

Ross, please keep writing, you are an inspiration!
And most of all, thank you!