Entrepreneurs Backed with Venture Capital
Obtaining a venture capital is extremely different from raising a loan or a debt from a lender. Lenders have the right to put interest on the loan and repayment of the capital, irrespective of the failure or success of the business. Venture capital is an exchange for the business equity stake. As a shareholder, your venture capital return depends on the growth and profitability of your business. Venture capital is earned by shareholders if they withdraw their shareholdings when the business is sold to another entrepreneur.
Much has been said about venture capital funding, but who are the shareholders and who are the entrepreneurs backed with venture capital? The venture capital shareholders are the high potential, high risk and high startup companies. They are huge companies that are capable of funding small businesses. Entrepreneurs backed with venture capital are the startup founders. A recent study tracked 165 startup teams to find out who are entrepreneurs backed with venture capital.
Based on study results, black people in the U.S. who make up 115 of the United States population are among the startup founders. On the contrary, Asians make up about 4% of the population of the tracked teams, but 12% of the startup founders as well as all Asian teams are those that raise the most money. Entrepreneurs backed with venture capital are made up of white Americans 87%, black Americans 1% and Asians 12%.
Half of the population is 35-44 years old, but teams in the 26-34 demographics tend to raise more money than those teams in the older demographics. New York, Massachusetts and California are the three biggest startup states in America. However, Massachusetts has the older startup founders among them. Based on survey results, about 48% of startup founders in Massachusetts are over 45 years old. On the other hand, New York has the youngest founders out of them with 10% in 18-25 demographic.
1 out of 12 entrepreneurs backed with venture capital is a woman. This means 92% of startup founders are males and the remaining 8% are composed of female entrepreneurs. Teams composed of both male and female founders tend to raise the most money and they are just 8% out of all teams. Mixed teams can raise an average of $4.4 million compared to all-male and all-female teams that can also raise $2.2 million on average. One remarkable aspect is that 27% of all teams in Massachusetts are made up of all-female founders.
Almost all entrepreneurs backed with venture capital in the U.S. have a college degree. About 45% of them have a master’s degree, 465 have an undergrad degree, 7% have a Ph. D. and 2% have less than a college degree.
Most Prominent Locations
Out of the three biggest states with startup founders, New York has the highest percentage of founders with MBA’s (64%) and also has the highest percentage of teams with no college degree (4%). Entrepreneurs with less than a college degree or have undergrad alma maters are from Stanford, Harvard, Cornell, University of Pennsylvania, University of Illinois and MIT. Most common schools attended by degree holders and graduates include MIT, Harvard, Stanford, University of California, Northwestern and Emory.