Where Do Entrepreneurs Find Their Money?

In my experience talking to aspiring entrepreneurs on a daily basis, access to start-up capital is one of (if not the) overarching factor preventing them from pursuing their entrepreneurial aspirations.

I recently came across a video thanks to Brad Feld that was created by the Kauffman Foundation and is titled “Where Do Entrepreneurs Get their Money.”  I’ve embedded it below and it provides a great overview of your financing options as an entrepreneur.  The key points are:

1.    More than half of young companies get all their funding from founder savings and cash flow derived from the business.

2.    Credit cards are the second largest source of capital for startups after founder savings. 

3.    Friends and family are the third largest source of capital.

4.    Banks are the fourth largest source of capital.  The difficulty with banks is that they want to lend against secured assets, which most young companies don’t have.

5.    Venture capital is available to high growth companies, but interestingly, less than 20% of the fastest growing companies in the U.S. received venture funding thanks to #’s 1-4.

6.    In the last few years, new sources of capital have arisen such as Angel investors (Tech Coast Angels, AngelList) and peer-to-peer crowdsourced fundraising (Kickstarter, Lending Club, etc).

Here's the video.  Until next time, have a happy holiday season and cheers to a great 2012!

Innovation and Entrepreneurial Breeding Grounds

Yesterday I had the pleasure of attending the Tech Coast Angels Fast Pitch Competition where 10 finalists (out of 140+ applicants) conducted 90 second pitches followed by Q&A and scoring from an elite panel of judges.  It was an awesome display of entrepreneurship in Los Angeles.

The picture to the right was taken on my phone during one of the pitches.

What makes an event like this so special is the energy in the air.  Entrepreneurship becomes a living, breathing thing taking place before your eyes as people create, innovate and collaborate.  You could’ve walked into the room with a skeleton of an idea and walked out with 25 ideas on how to make it a real business. 

In the end, all participants benefited with entrepreneurship being the big winner.

This made me think – does anything like this exist in the golf industry?  It’s a large, struggling industry so one would think it’d be a meaningful effort, but to my knowledge the answer is no.  At least, I’ve never heard of it and a Google search produced no results.

The only thing I’ve ever seen was the “Inventor Spotlight Section” at the PGA Show this past year, which I tweeted about at the time – “@steventanner: In the ‘Inventor's Spotlight Pavilion’ section of @PGAGolfShows ... Lots of #golf trinkets but sadly nothing game-changing.”

The golf industry badly needs innovation – not in the form of new teaching aids or white driver heads, but in the form of game-changing business models that address the way people consume and experience golf.

I think a conference on this topic would be helpful.  Even just a two-hour event in one of the side rooms at the PGA Show.  If golf industry members had an entrepreneurial environment to learn, network and discuss their ideas, I bet a few innovative business models would come out of it.

If someone knows of an event like this in existence, please let me know.  Otherwise, I hope we see it soon.  I’ll be the first person registered.

And, if you’re an entrepreneur in any industry I encourage you to attend local events like what the Tech Coast Angels put on yesterday because I guarantee it’ll be a valuable experience.