As any business owner knows, it often takes money to make money—or at least to grow a business to the next level. But finding access to business capital can be tricky for many small business owners who have specialized needs. So what’s the best option for growth? Here’s a look at some of the growing trends in venture capital for 2016, as reported by Inc. magazine to help you get started:
Corporate Deals: More corporations are investing in small companies as a way to improve their innovation process and develop strong relationships with suppliers.
Incubators & Accelerators: There are currently approximately 2,000 incubators across the United States, with that number growing weekly.
Diversity = More Desired: Diversity is becoming a major element in investment teams, with results showing that more diverse investment teams typically yield better returns.
Women Taking the Lead: Results from a 10-year investment period of 600 early stage founders showed that female founders outperform male-only teams by 63 percent. Today, one out of five start-ups seeking capital has a female co-founder.
Minorities Are Flourishing: In 2015, 41 percent of new entrepreneurs were non-white, and in 2016, the majority of entrepreneurs seeking capital are expected to be minorities. This growing national trend represents positive change for non-white and female business owners.
At-a-Glance: Women’s Access to Capital
*According to the National Women’s Business Council
- Men typically start their businesses with nearly twice as much capital as women.
- High credit scores, owner age, incorporation status, number of employees and high-growth potential are all associated with an increase in the proportion of capital coming from outside debt.
- Factors that have a positive impact on total financial capital include previous start-up experience, high credit score, incorporation, team ownership and number of employees.
- Being home-based is shown to have a negative relationship with total financial capital.
- Women-owned firms are typically less likely to expect rapid business growth—and more likely to actually see it.