Thoughts on Startup Funding

 Ponder on this when you want to start your own business. Especially in Silicon Valley.

1. VCs only fund <0.9% of the startups they see.
2. Angels? They’re at about the 1.9% range.
3. >70% of funding comes from internal sources (internal investment, debt, the “bank of friends and family” ->BOFF).
4. VC firms have to make a 3:1 return on their investment pool to justify the risk and management fees. Barely 5% manage to do that. Over 50% of VC firms don’t even break even (
   https://techcrunch.com/2017/06/01/the-meeting-that-showed-me-the-truth-about-vcs/
   ).
5. Your odds of a big breakout (unicorn) company are right around 1%.
6. Most people have no idea how to tap the BOFF effectively and efficiently. Accessing retirement funds, being able to qualitatively discuss risk issues and strategies, having a strong mechanism for working in a warm market - founders don’t know these things, and most of the business types that tell you they will help get you funded, don’t know either. Hint: If they don’t know what a warm market is, how to work referrals, and what an SD-IRA rollover is, then they don’t get it. Most of the time, they will have you go after VC and angel money - you know, that very-low-odds stuff.