GOOD READS

Startup CEOs Crave Venture Capital, Not Crowdsourcing

With the passage of the JOBS Act, you might think startup entrepreneurs would be heading to the nearest website to get hundreds of individuals to pool their money and fund their growth. But it looks like more CEOs are hoping to get their growth money from good old-fashioned venture capital firms.

That's according to a recent update to a 2010 study from national law firm Dorsey & Whitney that polled more than 300 startup CEOs about their funding plans.

One reason startups are looking hard at traditional VC is the rise of newer firms that have made a splash with their investments, including Andreessen Horowitz and Google Ventures. Renowned firms including Sequoia Capital and Kleiner Perkins Caufield Byers also made the study's list of most-desired investment partners.

Related: The JOBS Act: What You Need To Know

More VC money appears to be circulating, too: more than 36 percent of the startups based in major-metropolitan cities reported they had done a funding round in the past year, compared with less than 29 percent in 2010. Startups based in rural areas did almost as well, with nearly 34 percent reporting they'd score funding.

In the recent period, more CEOs reported they raised between $1 million and $5 million than they had in 2010, and fewer said they'd raised $500,000 or less.

Their outlook on future fundraising was more bullish, with 30 percent of the CEOs expecting to raise between $1 million and $5 million in the coming year. That compares with 23 percent in 2010.

Startups in cities are also making more use of business incubators, the study showed. Fifteen percent of the startups in metro areas said they'd used incubators for early help and funding, compared with less than 9 percent in 2010.

The study points up the advantages of getting help from traditional funders who offer business experience as well as money, compared with using crowdsource websites. With the latter, you get money, but from individuals whose investments are each very small -- and generally, they don't get a seat on your board or have expertise to share. The CEOs were strongly in favor of getting funding from investors with whom they have an established relationship, which isn't part of the crowdsourcing approach.

Where will you find funding for your startup? Leave a comment and let us know. 

Related: Six Mistakes Entrepreneurs Make When Seeking Venture Capital

This article originally posted on Entrepreneur.com

Quiz: How well do you know India's economy?

Question 1

Which of these products is India the world's largest producer of?

Poll Choice Options
  • Wheat
  • Rice
  • Milk
1
2
3
4
5
6
7
8
9
10

Latest News

  • Apple lifts Nasdaq; Ukraine drags on broader market

    The Nasdaq rose modestly in choppy trade on Thursday as Apple's shares rallied a day after the iPad maker's strong results, though tensions in Ukraine held back the broader market. Caterpillar Inc (CAT.N) shares jumped nearly 2 percent and helped limit the Dow’s loss after the world's largest maker of earth-moving machinery reported earnings that exceeded Wall Street's expectations. The three major U.S. stock indexes had opened sharply higher, with the Nasdaq initially climbing more than 1 …

  • Austin Modern With Replica Cadillac Showroom Asks $1.6M

    Have a nomination for a jaw-dropping listing that would make a mighty fine House of the Day? Get thee to the tipline and send us your suggestions. We'd love to see what you've got. Click here to view the full... …

  • Met office sees below-average monsoon in 2014
    Met office sees below-average monsoon in 2014

    India is likely to have below-average monsoon rainfall in 2014, raising the possibility that drought could stoke inflation and hit a sluggish economy dependent on the elements because half the country's farmland lacks irrigation. To cut dependence on rains, India plans to expand irrigated farmland by at least a tenth by 2017. The Indian Meteorological Department's (IMD) first monsoon forecast on Thursday was in line with the outlook of the World Meteorological Organisation that predicted …

  • Japan's NTT Docomo to exit Indian market - Nikkei

    REUTERS - Japan's NTT DoCoMo Inc will unload its 26 percent stake in its loss-making Indian mobile phone joint venture, Tata Teleservices Ltd, and withdraw from the country, the Nikkei newspaper reported. ... …

  • Tour the Arresting Interiors of the World's Top Meeting Rooms

    The Federal Parliament Building in Bern, Switzerland. Photo by Luca Zanier/Wired How much did the outcome of the Cuban Missile Crisis depend on the decor of the Situation Room? An open question, to be sure, but Swiss photographer Luca Zanier... …

IN-DEPTH ANALYSIS & INTERVIEWS

  • Too good to be true?

    Developers are offering lucrative buyback schemes. But such promises may not be always kept. …

  • Leaderspeak with Vikram Limaye

    Vikram Limaye MD & CEO, IDFC Ltd shares many firsts from his life. …

  • The Greening of the House of Tatas

    How a dedicated team converted a 90-year-old heritage structure into a benchmark for environment-friendly buildings. …

  • Appy Voting

    Mobile and online apps, seeking to inform or influence voters, have been more active than ever before in this election. …

  • In the crosshairs

    Why the future of FDI in multi-brand retail looks bleak after the polls. …

  • A Samurai from Chandigarh

    Advertising veteran Sandeep Goyal is disarmingly frank as he recounts his years with Dentsu. …

  • Falling in line

    Global investors gear up to working with Narendra Modi despite reservations about his secular credentials. …

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    16.52-0.33-1.96%
    UNITECH.BO
    14.31-0.27-1.85%
    SUZLON.BO
    120.40+7.00+6.17%
    FRL.BO
    66.05+4.10+6.62%
    MANGCHEM.BO
    54.40+1.65+3.13%
    HCLINFO.BO
  • Price % Gainers
    Price % Gainers
    NamePriceChange% Chg
    16.20+2.70+20.00%
    JAGSONPH.BO
    53.50+8.90+19.96%
    RUSHIL.BO
    40.45+6.45+18.97%
    RCIIND.BO
    63.95+8.90+16.17%
    MRPL.BO
    24.00+3.10+14.83%
    NELCAST.BO
  • Price % Losers
    Price % Losers
    NamePriceChange% Chg
    10.95-10.95-100.00%
    4THGEN.BO
    17.30-17.30-100.00%
    ALFAICA.BO
    16.81-16.81-100.00%
    AMAL.BO
    11.73-11.73-100.00%
    BORAX.BO
    29.95-29.95-100.00%
    BRADYM.BO
  •  
    Recent Quotes
    Symbol Price Change % ChgChart 
    Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
    You need to enable your browser cookies to view your most recent quotes.
  • Recent Quotes News

    •  
      Sign-in to view quotes in your portfolios.