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Obtaining money for a startup company

Maryland citizens looking to start a business may wish to research some common experiences with obtaining funding for their enterprise. Many companies have begun in this state, and their background in searching for capital may be instructional to those who wish to follow in their footsteps. One lesson they have learned is to be pragmatic about capital. Venture capitalists account for only 1 percent of the funding for startups. Family members and friends, on the other hand, provide about 24 percent of the money needed for businesses to begin. Statistics indicate that 82 percent of all beginning ventures involve some amount of self-funding. This implies that those who wish to start a new company may find their own resources to be the most reliable. However, crowdfunding is a steadily growing portion of the market. Crowdfunding has become more reliable than venture capital, as it now accounts for 3 percent of startup business funding. This method of obtaining the money necessary to operate has grown to provide more than $5.1 billion to startups in the few years of its existence. $2 million now comes in from crowdfunding in an average day, and that number may continue to climb.

Business planners may also want to take note of what sorts of enterprises attract the most capital. Software, media and biotech companies represent the lion's share of the funding taken in, with software startup companies reporting nearly $14 billion invested. By way of contrast, health care service companies took in only $280 million.

Business formation and subsequent financing are regulated by both state and federal law. An attorney with experience in this area can provide a wide range of assistance to prospective entrepreneurs, beginning with advice on the best type of entity to use and continuing through advice and counsel regarding financing alternatives.

Source: Entrepreneur , "The Many Paths to Starting a Startup (Infographic)", Geoff Weiss, December 19, 2014

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