Start-up Financing
The initial financing for a new venture comes from the entrepreneur. A number of surveys show that about three-quarters of financing is obtained through the founder(s), including personally guaranteed loans and savings. The balance is a mix of government plus others, including family, and venture capital. Table 15.6 sets out the details.
The hunt for financing takes time. Initial funding can take up to one year. The financing for Featherlite Inc. is a rare example. It TABLE 15.6 Start-up
Most new enterprise go through a number of phases in reaching maturity. Some are fully financed within a year of two. Others may never go to public financing. In the United States 99 percent of U.S. corporations are privately held. In Canada the ratio is less.
Financing stages
The financial community has developed a classification of investment capital in five developmental stages.