If Venture Capital Financing truly the way to Go to Fund Your Venture?

When we think of the most successful entrepreneurial ventures. We automatically assume that they must have been financed with venture capital. Like many assumptions, this is not true, and with little basis. Granted, venture capitalists tend to like risk more than others, but this does not reflect the numbers. They should logically be more keen than others to fund startups. Let us look at why this is not true in any way.

Venture Capital is the Exception, Not the Norm

Venture capital financing is, unlike what we might think, the exception, rather than the norm. This might be quite mindblowing and hard for you to believe. I found it hard to believe myself, until I saw the numbers. Looking at the facts, throughout history, only 1% of American companies have raised capital from venture capitalists. That’s right, only 1%. This is an almost negligible amount. Not only this, but the market is shrinking. For instance, from the peak in the late 90s, preceding the Dot Com Bust, the number of venture capitalist firms has fallen from 744 to 526 in the period from 2001 to 2011. Not only this, but the amount raised in 2001 was only USD 19 billion when compared to USD 39 billion in 2001.

Where Should I Go for Financing Then?

Do not fret. If you thought that venture capital was the holy grail. The reality is that it never was. There are numerous other ways to get funding, and they are growing fast. This gives you more options than anybody could have ever hoped for in the past. For example, angel investors are becoming numerous, and have historically provided more than 16 times the funding than venture capitalists. Not only this, but this number is growing. Another source of funding for your startup is crowdfunding. It has received a lot of press, both good and bad. There is a reason that there is a lot of press. This is due to the fact that it is actually making a difference. It opens up potential backers to ordinary people