Connect with us

Hi, what are you looking for?

The American GeniusThe American Genius

Business Finance

How small businesses get their funding: statistics

Every entrepreneur faces the decision of how to pay salaries, and the options vary so widely, that the task of choosing can overwhelm. Today we address the recent trends in small business funding to help clarify.

money for paycheck

money dollar

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.

Advertisement. Scroll to continue reading.

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.

Written By

Marti Trewe reports on business and technology news, chasing his passion for helping entrepreneurs and small businesses to stay well informed in the fast paced 140-character world. Marti rarely sleeps and thrives on reader news tips, especially about startups and big moves in leadership.

3 Comments

3 Comments

  1. seals and gaskets

    November 23, 2012 at 12:56 pm

    Interesting, i was not aware about the fact that Apple and Google both got a hand from Angel. Although twitter is now acquired by Google but this is really NEWS for me and you are keeping good eye on such laws and info.

Leave a Reply

Your email address will not be published. Required fields are marked *

Advertisement

The
American Genius
news neatly in your inbox

Subscribe to our mailing list for news sent straight to your email inbox.

Advertisement

KEEP READING!

Business Finance

Business owners are no strangers to placing bets on their own success, but retirement planning shouldn't be risky.

Business Entrepreneur

Being a freelancer, it can feel like a luxury to fire a client, but there's a few clear signs they're not worth your time.

Tech News

Some small business owners aren't doing as bad as you may think in the midst of inflation. The businesses are still booming!

Business Entrepreneur

Layoffs are spreading and small businesses are no exception. Business owners can prepare with this how-to guide on severance packages.

The American Genius is a strong news voice in the entrepreneur and tech world, offering meaningful, concise insight into emerging technologies, the digital economy, best practices, and a shifting business culture. We refuse to publish fluff, and our readers rely on us for inspiring action. Copyright © 2005-2022, The American Genius, LLC.