StartupCon 2019 – Funding trend in the US

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Here is an insightful deep-dive session by Shelly Bell on the funding trend in the US at the StartupCon 2019.

“Shelly Bell is a system disruptor and business strategist who moves ideas to profit while empowering people to live more authentically. As a cultural translator, she connects entrepreneurs, investors, and corporations in order to diversify their talent pipeline, increase equity and grow their brands.

She is what best-selling author Daniel Pink defines as “A Whole New Mind” – a Serial Entrepreneur & Computer Scientist with a background in performance poetry, K-12 Education and IP Strategy. She was named Entrepreneur of the Year by Technically DC and acknowledged as A Rising Brand Star by Adweek. She is among the nation’s most sought-after transformational speakers in the Washington, DC Metro area. She has been featured in Forbes, Politico Live, The Washington Business Journal, NewsOne, The Afro, and People of Color in Tech. Her organization, Black Girl Ventures (BGV) is a social enterprise that creates access to social and financial capital for Black/Brown women founders. BGV travels the country with a disruptive pitch competition that shifts the power dynamics in funding by combining crowdfunding and pitching. As a Google Guru and Ecosystem Builder, she engages audiences from grassroots to government. Shelly has trained over 5,000 entrepreneurs, held over 300 events for empowering leaders, managed multi-million dollar contracts, and scaled over 100 businesses.”

Below are the key questions which were discussed by Shelly and gives a sneak-peek into the startup ecosystem in the United States.

Who Are The Founders?
Who Are The Funders?
Where Is The Funding Going?
What Is The Future Of Funding?

Who Are The Founders?

Approximately 62 percent of the US billionaires are self-made. In the year 2016, there were 25 million Americans who were already running their own business or were starting a new business. According to the data, 83 percent of business owners started their own business, approximately 11.3 percent purchased their business and 7.2 percent inherited the business or received them as a gift.

In consideration of gender dynamics, now also, the start-ups’ businesses are male-dominated. More than 46k start-ups with 53% w/ women executives and 37% w/ women board members.

The median amount needed to start a company is between $15K and $18K. Of the startups surveyed, 58% started with less than $25,000 and one-third started with less than $5,000. Only 6% of U.S. startups believe organic growth will be their company’s next source of funding

Who Are The Funders?

In the United States, various corporations and small business association grant capital for innovations and ideas. However, 82 percent of the start-ups’ funds come from entrepreneurs, friends, and family. Earnings, debt capital, and equity capital include typical funding sources.

The typical funding rounds include:

SEED: $10K – $2M
SERIES A: $2M – $15M, VALUATION UP TO $15M
SERIES B: $7M – $10M, VALUATION $30M-$60M
VALUATION $100M+, ANTICIPATING IPO, GLOBAL SCALE

Some popular US-based firms are Accel (Seed growth), Andreessen Horowitz (Seed growth), Benchmark (early stage), Sequoia Capital (Seed growth), and GGV Capital (expansion stage).

The majority of VC funding is invested in mainly 3 cities – Boston ($2.87 B), San Francisco ($3.49 B), and New York ($4.19 B). Also, most of the VC funding is invested in founders from the schools namely Harvard, Standford, and Yale.

Being tech or non- tech isn’t the question, the start-up ideas should be useful, scalable and indispensable.

The Rise of A New Era

Between 2018 and 2019, U.S. women started an average of 1,817 new businesses per day, representing 42% of all businesses. Over the past five years, the number of women-owned businesses went up by 21%, more than double the increase of 9% for all businesses.

The focus is on raising the average number of business and to bridge gender imbalances and avoid gender discrimination. This is an empowering movement to balance the upcoming future.

Industries that you need to watch out for are: