THE MARKET FOR FINANCING OF SMALL BUSINESSES IS HUGE
According to the 2014 Annual Performance Report published by the Small Business Administration,
Approximately 51,500 small businesses receive funding in 2014 through SBA’s main lending programs. Venture capitalists invested $49.3 billion in 4,361 transaction involving 3,665 startups, according to the National Venture Capital Association Yearbook for 2015. However, even though companies funded by venture capitalists tend to have a better survival rates, the majority of startups fail within five years.
According to the Securities and Exchange Commission, in Release 33-9974, the average size of equity-based crowdfunding offerings was $175,000. Although there are no statistics available for 2015, it appears that this amount could increase substantially in the future as a result of the passage of Regulation CF.
A startup company could potentially use Regulation CF as its IPO, to be followed up by subsequent offerings if the business is successful.