Five Myths About Financing That Hurt Entrepreneurs
Most entrepreneurs believe a bunch of myths about financing new companies that hinder their efforts to raise money. Here are a few:
Myth 1: It takes a lot of money to finance a new business. Not true. The typical start-up only requires about $25,000 to get going.
Myth 2: Venture capitalists are a good place to go for start-up money. Not unless you start a computer or biotech company. Computer hardware and software, semiconductors, communication, and biotechnology account for 81 percent of all venture capital dollars, and 72 percent of the companies that got VC money over the past 15 or so years.
Myth 3: Most business angels are rich. If rich means being an accredited investor — a person with a net worth of more than $1 million or an annual income of $200,000 per year if single and $300,000 if married — then the answer is “no”.
Myth 4: Start-ups can’t be financed with debt. Actually, debt is more common than equity.Myth 5: Banks don’t lend money to start-ups. This is another myth. Again, the Federal Reserve data shows that banks account for 16 percent of all the financing provided to companies that are two years old or younger.
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Harriet West on September 18th, 2009 5:25 pm
Geeze. I thought that this section was really going to go into some of the psychological traits of an entreprenuer. That would have been truely interesting. Instead, it told things most of us alreay know.
There was oh so much more that could have been said here.
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