VC Money: If You Don't Need It, Don't Take It
Recently, the Kauffman Foundation has been releasing a series of ‘sketchbook’ videos to “demystify the phenomenon of entrepreneurship and bring to light messages about the important role entrepreneurs play in innovation, job creation, and economic growth.” The latest in the series features Paul Kedrosky, a senior fellow at the Foundation as well as an investor and entrepreneur himself.
There's no question that startups need money to grow. But although there is not more capital available to new companies, the sources of capital--from personal savings to loan programs to crowdfunding platforms--abound despite the economic downturn.
In "Money Game," Kedrosky breaks down the various methods that entrepreneurs use to raise capital for new ventures, as well as the benefits--and hazards--tied to each. While entrepreneurs' greatest source of capital is personal savings, Kedrosky says in the video, the second most common type of new business financing is credit cards. He goes on to explain that, despite getting most of the attention, venture capital money is not a common source of funding for startups—and perhaps more importantly, if you don’t need VC money, not to take it.