Small business and cash
Launching a business or keeping one in business can be a major challenge, and some entrepreneurs take on the task with their own wallet, while others choose to borrow from friends and family, a bank, and others seek angel investors or venture capital dollars. Funding can help a company to launch, stay afloat, or grow to reach success.
In a recent infographic from Bolt Insurance, one in three small business owners borrow money from family and friends, while fully 75 percent of young firms’ funds come from bank loans and credit, with an average of $80,000 annual owner investment in young firms. For every $6.27 of venture capital invested since 1970, $6.27 of revenue was generated. Not everyone takes the funding route, however, as one in ten startups don’t use capital injections of any sort.
Angels, VC, and the increasingly popular crowdfunding option
Companies backed by venture capital dollars have generated millions of jobs – 1,179,287 jobs in the computer industry, and 734,064 jobs in software, just to name two key sectors. Venture capital dollars and numbers of deals completed in the last 20 years hit their highest point in 2000, and are hovering around a third of the volume prior to the recession.
Companies that got a hand from angel investors include Twitter, Google, Bell, Apple, and even Ford. In 2011, healthcare, industrial/energy, and biotech were the most popular sectors for angel funding, followed closely by software, media, and retail.
Meanwhile, crowdfunding is becoming a popular method of fundraising, with a 91 percent increase in 2011 alone, with Kickstarter.com alone pledging over $275 million. The most popular industries for crowdfunding are film and video, followed by music, games, design, technology, and publishing.
Thanks to the new laws going into effect as of January 2013, a new company can raise up to $1,000,000 a year from individual investors in exchange for equity in the company, which will change how investing works in coming years.