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Most startup funding comes from savings, friends and family (infographic)

Posting in Technology
For most startups, funding is an extremely personal matter. The largest chunks of seed capital don't come from venture capitalists, banks, or anything else on the grid.  It comes from the founders' own pockets, followed by support from family and friends.

Thus, it can be surmised that many new businesses have very serious money tied up in their launches, reflecting the personal commitment of their founders. Of the total $531 billion raised to launch new ventures in the United States alone over the past year, personal savings and credit was the leading source, accounting for $185.5 billion, or about 35% of all seed capital. Family and friends accounted for $60 billion, or 11% of the total. Venture capital comes in distant third at $22 billion, or a paltry four percent of the pot. 

Self-funding is not a bad thing at all. Viewers of the show Shark Tank, for example, see first-hand that even the most hard-hearted investors have a deep respect for founders who put up a lot of their own equity into an idea.

Fundable, a crowdfunding site, analyzed the numbers from the past year and provides breakdowns in the infographic below of where startup seed money really comes from.


(Source: Fundable.)

— By on December 2, 2013, 12:47 PM PST

Joe McKendrick

Contributing Editor

Joe McKendrick is an independent analyst who tracks the impact of information technology on management and markets. He is a co-author of the SOA Manifesto and has written for Forbes, ZDNet and Database Trends & Applications. He holds a degree from Temple University. He is based in Pennsylvania. Follow him on Twitter. Disclosure