YouTube landed millions in venture-capital money in its first year to expand so fast that its founders were able to sell the video-sharing company to Google last week for $1.7 billion.
For most entrepreneurs, however, venture capital isn’t an option. VCs, investing for institutions and rich individuals, likely will invest in fewer than 3,400 of the USA’s more than 20 million small firms this year.
Instead, a majority of founders reach into their own pockets or turn to family members, who provide nearly $60 billion a year in start-up and expansion funding. Today’s typical new business sells a service, such as bookkeeping, so requires little more than an inexpensive computer, a fax machine and a home office. Even trendy start-ups such as YouTube get going with a handful of computers lashed together in a garage.
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