Comments on: Venture Capital Model Visualization

By: Scott

Scott — Thu, 12 Mar 2009 20:35:38 +0000

Valid inquiries. I was blown away by the figure, too; however, when I look around at the entrepreneurs around me, many of them are starting companies without registering with the US Dept. of Commerce. Many feel that it’s wise for individuals to first generate cash flow before they declare themselves a corporation (and have to bear the cost associated with that). For instance, even an attorney I know recently left his huge, prestigious firm. He’s operating right now, and hasn’t incorporated–he’s not set on a name (just doing a sole-proprietorship). Another guy I know has been making money through his web startup for over 2 years. Still doesn’t have a corporation; he just uses his paypal account lol.

My feeling is that Kauffman surveyed and used these types of entrepreneurs as a representative figure, as well.

By: Sean Eby

Sean Eby — Thu, 12 Mar 2009 19:51:45 +0000

I’m not sure where the Kaufman Foundation got its data but that sounds highly inflated. If you look at the United States’ Small Business Administration FAQ (http://web.sba.gov/faqs/faqIndexAll.cfm?areaid=24), they indicate there were only 631,700 new firms created in 2007, not anywhere near 5,580,000. Also, there are apparently somewhere in the vicinity of 27.2M businesses in total in the US and that includes businesses with only 1 person (no employees).

If this data is correct, that great shifts your numbers above.

By: Something's Wrong Here

Something's Wrong Here — Thu, 12 Mar 2009 15:41:10 +0000

Uh, so this data assumes that *every* “successful” startup has taken VC? I think if you look at US Dept. of Commerce data they would highly refute that; majority of US small businesses do *not* take VC and are still alive.

Perhaps you’re defining the “5,580,000 startups” as “5,580,000 startups who pitched VC”?

By: Something's Wrong Here

Something's Wrong Here — Thu, 12 Mar 2009 15:41:10 +0000

Perhaps you’re defining the “5,580,000 startups” as “5,580,000 startups who pitched VC”?

By: Something's Wrong Here

Something's Wrong Here — Thu, 12 Mar 2009 15:41:10 +0000

Perhaps you’re defining the “5,580,000 startups” as “5,580,000 startups who pitched VC”?

By: chris

chris — Thu, 12 Mar 2009 12:40:50 +0000

sorry, i dont quite get it.

how do you measure the success of a new vc deal 2008 (3,808) in March 2009? or in other words: what do the home runs (76) actually tell you at this stage?

i am actually surprised investors already got an roi over 100 percent in 76 cases by now.

By: Berislav Lopac

Berislav Lopac — Thu, 12 Mar 2009 11:58:12 +0000

I’d like to see the figures when focusing on high-tech (ICT, Web, mobile…) startups only.

By: Scott

Scott — Thu, 12 Mar 2009 06:16:48 +0000

Heh, I agree — I hope it doesn’t go away, at least! I’m profoundly interested in the next evolution/look of venture capital

By: Shawn Pray

Shawn Pray — Thu, 12 Mar 2009 06:14:38 +0000

The venture capital industry is not going to go away. The venture capitalists will adapt to the new economy and entrepreneurs seeking funding will adapt to new funding requirements. There will always be people with money wanting to invest outside of the stock market and start-ups that require capital. I think it will be a little bit before the new rules of the new economy wil be determined.