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Surprising Statistics
| 5,700,000 | | The approximate number of companies (employer-based firms) in the US. |
| 600,000 | | The approximate number of new companies incorporated in 2000. |
| 5,400 | | The approximate number of companies that received venture financing in 2000. |
| 406 | | The number of companies that went public in 2000. |
Sources: U.S. Dept. of Commerce, National Venture Capital Association and IPOHome.
As you can see from the above stats, only a small percentage of the new businesses incorporated in year 2000 received venture financing (less than 1 percent). More importantly, year 2000 was a highly atypical year from a historical perspective, setting new records for venture financings, IPO's and the like. In fact, venture investments have declined substantially in 2001 and 2002 YTD.
To increase your odds of success, companies that raise venture capital typically share several of the following characteristics:
- The real possibility of achieving a significant ROI (e.g. 50 percent or more in three to five years).
- Defined exit strategies on a timeframe that is attractive to investors.
- A high-energy management team, preferably with experience in the industry, in growing a company and in exiting a business successfully.
- Large business opportunity (market potential) in a growing market.
- A product or service that is unique, with a compelling value proposition.
- A demonstrated, clear path to profitability, alongside substantial revenue growth.
- Management willing to share ownership and control in exchange for capital.
- Management’s ability to listen, incorporate constructive input from a team of key advisors and to respond decisively.
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