The True Sources of Startup Business Capital

Public perception is often skewed when it comes to startup business funding options. Venture capitalists back several companies in Silicon Valley. Some of these companies went on to sell for billions of dollars, and everyone, including some of the first employees working for these companies, cashed in on the deal.

While this does happen occasionally, this is not what business owners should look at when they want to start a new company. Instead, they should consider more realistic scenarios and numbers.  

Seek Capital conducted a thorough study on startup business capital in the US. The overall findings are nothing like the Silicon Valley example provided above.

Real Estate

In the real estate and rental leasing industries, 2,179,696 total employees in the US work for 385,826 different establishments. The primary methods for funding startups in this industry are personal savings accounts and business loans from the government. The 5-year survival rate for businesses in these industries is an impressive 59%, with average startup costs ranging from $10,000 to $24,999.

Arts, Entertainment, and Recreation

For the arts, entertainment, and recreation industries, the numbers are a little different. There are a total of 2,293,872 employees working at 141,502 different companies. The median startup costs for the arts and entertainment industries are $25,000 to $49,999. It’s interesting that the 5-year survival rate is 53.1%, which is much lower than the real estate and leading industries.  The primary methods of funding these startups are investments by venture capitalists, business loans from the government, and government-guaranteed business loans from the bank.

Information

In the information industry, 2,793,429 employees work for 162,702 new companies. More than 500,000 more employees work in this industry than in entertainment and real estate. The 5-year survival rate for new businesses in the information industries is 44.3%, much lower than the examples above. The median startup costs for these new businesses are way lower than you may expect: $10,000 to $24,999. The primary funding methods include investments by venture capitalists, grants, and business credit cards.

Education

The educational services industry employs 2,824,421 people at 117,479 new companies. This large number of employees is similar to the information industry. The 5-year survival rate is 56%, which is great for the economy because these companies employ so many people. The median startup costs for a new educational services company are $10,000 to $24,999, and the primary methods for funding these companies are business credit cards, personal credit cards, and grants from the government.

Transportation and Warehousing

A total of 4,947,369 employees work for 242,932 new companies in the transportation and warehousing industry, significantly more than all of the previous industries combined. The 5-year survival rate is nevertheless over 50.1%. The median startup costs for these businesses are a little higher than the information and educational services industries at $25,000 to $49,999. The primary methods of funding are business loans from the bank, personal credit cards, and business credit cards.

Retail

Retail trade is by far the largest industry for new businesses in the US. There are over 15,854,454 employees working for over 1 million new companies. The 5-year survival rate for these companies is still very high — 55.1%. The median startup costs for retail trade are a little higher though, between $50,000 and $99,999. The primary methods of funding are also a little bit more traditional and include government grants, business loans from the bank, and government-guaranteed business loans from the bank.

Everyone wants to start and own the next big venture-capitalist backed company. However, this report provides a reality check about the other businesses that you can successfully start, how much money you will need, and how to get it.