Don’t let the massive funding announcements fool you: Many entrepreneurs are financing their ventures all on their own, according to a recent study. The Global Entrepreneurship Monitor (GEM) Report, partly issued by Babson, revealed how much money entrepreneurs needed to launch their companies in 2015, along with the most common sources of capital.
According to the GEM report, U.S. entrepreneurs required a median of $17,500 in funding to launch their companies - 57 percent of which was funded by themselves. Women also reported requiring $10,000 - half as much funding as men reported - to start a company.
“Globalization, changes in technology, and social awareness have provided an impetus to develop capital flows from diverse sources,” Donna Kelley, Babson Professor of Entrepreneurship and the report’s lead author, said in a statement. “Startup activity benefits from widespread recognition of the role entrepreneurship plays in increasing employment and improving the economic health of the nation.”
The study showed the most popular sources for funding, in addition to the percentage of entrepreneurs who used those capital channels. They are as follow.
- Banks (36 percent)
- Family (24 percent)
- Private equity or venture capital (24 percent)
- Government (22 percent)
- Employers or work colleagues (16 percent)
- Friends (15 percent)
- Crowdfunding campaigns (12 percent)
Image via 401(k) 2012, CC BY-SA 2.0.
