2nd in a series explaining how DF crushed the ability of small cap companies to raise capital

As illuminated in the chart below, Dodd-Frank crushed the valuations of start-up/emerging companies:

Typical Sources of investment capital for start-up/emerging companies are:

  • Personal Loans/Credit of Founders – fund 57% of start-ups
  • Friends & Family – fund 38%
  • Venture Capital Funds – fund .05%
  • Angel Investors – fund .91%
  • “JOBS Act” Crowd Funding – too new for reliable metrics, although expected to increase

The metrics above reveal that “Personal Loans/Credit” of Founders and “Friends & Family” provide the preponderance of capital for start-up/emerging companies. As these capital sources become “tapped” out, these companies need to attract family office and other investment firm capital to survive.  Subsequent articles will illuminate the reasons why the DF crushed stock valuations have made it virtually impossible for start-up/emerging companies to obtain investment firm capital.