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Showing posts from May 16, 2013

The Myth of Venture Capital

Funding a start-up is always a hot topic, unfortunately, all too many prospective business owners believe more than a few myths about financing a start.  Below is a small excerpt from a longer article, Six Myths About Venture Capitalists by Diane Mulcahy, in the current online issue of The Harvard Business Review.

Myth 1: Venture Capital Is the Primary Source of Start-Up Funding
Venture capital financing is the exception, not the norm, among start-ups. Historically, only a tiny percentage (fewer than 1%) of U.S. companies have raised capital from VCs. And the industry is contracting: After peaking in the late 1990s, the number of active VC firms fell from 744 to 526 in the decade 2001–2011, and the amount of venture capital raised was just under $19 billion in 2011, down from $39 billion in 2001, according to the National Venture Capital Association (NVCA).
But less venture capital doesn’t mean less start-up capital. Non-VC sources of financing are growing rapidly and giving entrepre…