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Kauffman Sketchbook: Where Do Entrepreneurs Get Their Money?

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My friend Paul Kedrosky – who spends some of his time as a Senior Fellow at the Kauffman Foundation – has a thoughtful short video (as part of the Kauffman Sketchbook series) on where entrepreneurs get their money. While it’s easy to get confused and think that VCs are the center of the financing universe, Paul reminds us that most entrepreneurial companies are funded by the entrepreneur’s savings, cash flow, credit cards, friends, and family.

It’s a creative three minute video with plenty of meat to it.

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December 3rd, 2011     Categories: Financing     Tags: , ,
  • http://blogmutt.com Scott Yates

    Great video, and I can actually say I was preaching this five or six years ago when I started the blog http://creditcardvc.com/ 

    I then didn’t take my own advice, and it lead to a couple of the hardest years of my life.

    Now I’m happy as a clam running http://blogmutt.com/ and while we’ve taken a small amount of funding in a note and may take some more, customers are our main funding source right now. They are the best source of funding by far. The terms are great, and all they want in exchange is an incredible product. We love building and delivering that product, so everyone’s happy.

  • Grant Carlile

    I’ve increasingly been visiting the Kauffman Foundation’s site that I threw it up on my bookmarks bar (see attached photo). The follow up blog post to this, in my mind, would be how entrepreneurs deal with the depleted savings and racked up credit card balances.
    And I think Paul made a great point that VCs get the “lion-share of the attention”. Honestly, it’s a great story too. A story about a VC experience is exciting, it has more narratives from the greater number of people involved, and creates a win-win when told in front of audiences (both the startup and VC fund gain exposure).
    In contrast, I believe that a story about how a startup funded based on savings and credit cards would be beneficial for aspiring entrepreneurs and continuing entrepreneurs to hear. In addition, interesting to hear how they juggled the monthly payments and how they decided what money (savings or credit card money) went to various parts of the business.
    “There’s no better thing than being in full control of your own destiny.”

  • http://www.alearningaday.com Rohan

    Brilliant. Love the format and the story! RSAnimate style!

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  • Mark Gavagan

    Great video, however it discounts the mentoring, connections and feedback from VC’s that can be invaluable. Should you take VC money if you have the chance? It depends…

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  • http://goteamspark.com chrispa

    Love the message.  In the interests of feedback, the wicked fast drawing gets a little tired though….hard to concentrate on the message with the hand zooming all over the place.  Phew – makes me a little tired just watching.  :)

  • Tom

    Back to the basics is always a great way to do it

  • Rich

    OK, so we see from the video that startups have difficulty getting funding. Also, we know that 90% of startups fail within the first five years because they don’t have enough capital.

    Is it just me or does it seem that the world is working hard to “help” startups fail?

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Brad Feld

Hi, I'm Brad Feld, a managing director at Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.