Where Startups Get Most of Their Funding

You’re launching a managed services business or expanding your organization. Where do you get the money to fund those new operations? A study from the University of Michigan suggests the answer has very little to do with angel investors and venture capitalists. Here are some small business funding stats worth noting.

As noted by Entrepreneur magazine, the university study found:

• More than 80 percent of new ventures were funded by owner savings, personal loans and credit cards. In short, owner financing exceeded all other sources by a wide margin.
• About 17 percent of entrepreneurs received financial help from the folks who knew them, loved them or liked them. For guidance on Friends and Family funding structures, check out this Inc. magazine guide.
• The average startup kitty was about $48,000 (though the median was less than $4,300).

Still, I do hear from a good number of MSPs who leverage loans from local credit unions because lending among traditional banks remains tight in some regions. And President Obama is pushing for a $30 billion program to help community banks make loans to small businesses, notes BusinessWeek.

But ultimately, it looks like most small business owners look in the mirror when it comes time to find someone to help fund their businesses.

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