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Startup's biggest funding comes from family, friends - Fundable

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(Credit: Fundable) This is the corporate logo of online platform Fundable.Fundable
December 3
12:12 PM 2013

An infographic released by online crowdfunding platform Fundable revealed that a significant portion of most startups's funding came from family and friends. This, said VentureBeat, debunked the notion that startups get majority of their capital from venture capital firms and via crowdfunding.

Fundable also disclosed in its infographic that around 565,000 startups are launched monthly, with each startup raising around USD78,406. Venturebeat calculated that around USD531 billion in startup capital were raised in a year. Fundable's graphic chart said Silicon Valley investors only contributed USD22 billion out of the estimated total startup capital, while angel investors make up around USD20 billion.

Moreover, founders were said to be the ones who shell out their own cash or use their credit lines to fund their businesses. In total, Fundable's figures disclosed that founders' USD185.5 billion from the annual amount came from their own pockets. Friends and family, on the other hand, make up USD60 billion of the annual startup capital, and invest an average USD23,000 in a business. Fundable also said that 38% of startups' funding sources are from family and friends.

Fundable pointed out that despite yielding bigger sums startups obtain from investors with deep pockets like angel investors and banks, the chart revealed that only 91% of them would award 1.43% of startups a larger funding. These types of investors could award a startup USD74,955 on average. Banks fork in USD14 billion in fresh capital into startups.

Venture capitalists, said Fundable via its chart, hand out fresh capital with an average of USD5.94 million into a new company. Venture capital firms were also said to write the biggest checks at an average of USD6 million in investment to early-stage companies. There are 462 active venture capital firms making 3,700 investments annually. However, Fundable said only 0.05% of startups gets to see this amount of cash and the kind of relationship or backing from a venture capitalist. Venture capitalists' investment activity was considered smaller as compared to angel investors, who write checks 16 times more than venture capital firms and investing in over 61,900 companies annually.

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