By Dee Power, Copyright July 1999

The Edward Lowe Foundation recently released a report concerning small business start-ups in the United States. According to their report 600,000 to 800,000 businesses are started each year that have at least two employees and another 2 million are started that have just one employee, the entrepreneur him/herself. Interestingly an additional 16 million of us are trying to start a business at any one time.

Now let's compare this with the level of funding from venture capital companies which is around $30 billion a year. Sounds like a lot. However about half that funding is second round financing, which leaves $15 billion for start-ups. Still sounds like a lot.

Unless you're one of the 2.8 million businesses that started up in the last year. If the venture capital funds were spread equally to each of those start-ups the average funds received by each business would be only $5356.00.

Searching for venture capital is not expense free. At the very least the entrepreneur has to complete a business plan or hire a consulting firm to assist in preparing the plan. Afterwards it's necessary to make copies, research the VCs, and mail at least a cover letter and executive summary to the selected VCs. Then there's following up with phone calls, sending out the full business plan and perhaps even a trip or two to personally meet the Venture Capitalists. It would be very easy to spend the entire $5,356.00 on looking for capital.

And the probability of receiving venture capital is so low, the entrepreneur might be better off playing the lottery.

Dee Power is a partner in the management consulting firm of Profit Dynamics Inc. located in Arizona. She is co-author of "The Quest For Capital: A Financing Guide for Entrepreneurs," Dee can be reached at profdyn@aol.com or at the company's web site The Capital Connection www.capital-connection.com