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Lijit Search

According to a new report presented to the United Nations in an event sponsored by the Kauffman Foundation, too much emphasis on institutional venture capital can hinder the development of an entrepreneurial economy:

• Based on data from the 2002 Global Entrepreneurship Monitor, fewer than one in 10,000 entrepreneurs launched their ventures with formal venture capital.  Only 19,000 entrepreneurs out of 286 million received part of $59 billion of venture funding.
• On the other hand, friends and family investors provided $271 billion to start-ups; 70% of which was in the form of investments of less than $6,700 per investor.

Some recommendations coming from the study included the following:

• Don't waste time by prematurely seeking formal venture funding.  Look at friends and family first.
• Educators should de-emphasize business plan competitions which steer aspiring entrepreneurs toward the formal venture market.

12:53:01 PM