Venture Financing: The Hard Facts

Government financing and venture capital financing account for less than one percent of all new business financing. Sixty-seven percent of all small to mid-sized businesses are financed by personal savings or friends; thirty-three percent are financed by lending institutions. The facts about venture capital financing are especially cold and hard…

• Venture capital is limited to high-growth potential, high capital-absorbing businesses.
• Venture capital benefits as few as 1000 businesses a year, and then…
• The average investment is $2.3 million, divided between 3-4 venture capital funds, which take 40-50-60 percent or more of the business’s equity.
• Venture capital investors expect the business to grow to $25-50 million within 5 years–at which time the business will go public or be sold.