Food For Founders #40
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|Stephen Alred Jr.||May 31, 2019|
There isn’t an update today. I spent the entire week on hiring activities for the KnowCap Ecosystem - speaking of if you or anyone you know is working on a startup (or an idea for a business) send them our way. After initially publishing the thesis for KnowCap last July, we are gearing up to start onboarding aspiring and current entrepreneurs into our ecosystem.
If you don’t know, our vision is to replace the exclusive power laws of angel funding, venture capital, and bank loan financing. We plan on doing this by providing the infrastructure and proven builders to founders in exchange for equity or revenue. With this model we can help people with ideas launch faster. A by product means that they can also leverage us to build their company while they work full-time - reducing the risk of entrepreneurship at scale.
See? That’s what we mean by changing those power laws. We want to build inclusive startup ecosystems that gives anyone the ability to launch a company. That’s why we’re building partnerships with providers of core barriers to entry for startups - Google Cloud (server space), Stripe (formation and payment processing), and HubSpot (marketing).
Which brings me to the core of this food for founders update. Last week Kauffman Foundation released their Capital Access report for 2019. There are a few notable anecdotes that prove that our model could be a catalyst for the next stage of American entrepreneurship.
Sounds big, right? Check out these stats and tell me KnowCap isn’t almost tailor-made to solve some of these issues...
Sources of startup capital
16.5% from business loans
9.1% from credit cards
6.3% from HELOCs
4.5% from friends and family rounds
NYC, Miami, LA, and Houston contributed 50% of VC firm creation from 2010-2014…this explains why 80% of capital go to NY, Boston, Cali, or Texas
Men are 60% more likely than women to get an investment when pitching the same business
15% of black founders vs. 9% of white and asian founders use credit cards to fund their businesses
The top 95% of wealthy individuals in the US are more likely to start businesses than other income groups.
“A higher household net worth of a founder is linked to larger amounts of external funding received...”
Among biz owners that needed capital 27% didn’t think loans would be approved, 9.5% thought the process would take too long.
Firms owned by women and minorities manage 1.3% of the $69 trillion in asset management industry
For all these reasons and more there is a reason to build inclusive startup hubs around the country to support founders who are overlooked in the startup financing “stack.” They don’t fit anywhere and it’s that age old catch 22, like entry-level roles looking for candidates with 2-3 years of relevant work experience.