Searching for venture capital? Join the club!

Searching for venture capital

Americans are searching for venture capital on Google far in disproportion to the number of companies that receive venture capital. We don’t have a definitive answer for why that is, but if you find yourself intrigued by all of the press venture capital receives you are not alone. We do share one theory down below.

The graph above is from a recent query we made on Google Trends. We were curious about how often people search for the various colors of money. We played around with different search terms to find which variation had the highest average searches (which can be useful for you to do!), in this case for a particular color of money. We learned about the difference between search terms and topics – the latter includes multiple related search terms.

One of the things we learned through this exercise is that the various meanings of “bootstrapping” distort Google Trends results for that search term. A particular bootstrapping meaning in physics has recently led to some breakthroughs and those have led to lots of searches in the past two years. There is also a meaning in software which regularly leads to searches about software bootstrapping.

That’s why we don’t include bootstrapping in this particular search comparison.

Below, we’ve taken the summary of search interest over five years and reformatted the results to bring the numbers into focus.

Google search interest in venture capital

As you can see, the relative interest in venture capital far exceeds the search interest in any other color of money. Technically, Google “normalizes” the results with the peak searches for a term during the period equalling 100.

What this graph shows is that over the past five years in the US, people searched Google for “venture capital” almost twice as often as they searched for “crowdfunding,” more than three times as often as “small business loans” and more than seven times as much as “angel investors.”

In contrast, as we showed in “Fundraising: How many companies get how much money,” almost 15X more companies get crowdfunding than venture capital, and about 7X more companies receive SBA loans and angel investment.

For sure, VC investments are on average much larger than those other types of financing:

  • average venture capital investment was $7.5 million
  • average SBA loan was $409,000
  • average angel investment was about $330,000
  • average crowdfunding fundraise was $67,000.

Perhaps then it’s human nature to be intrigued by the big lottery ticket winners. A big Powerball prize draws in players who normally sit on the sidelines.

And so it is with searching for venture capital. News of $100 million or even $500 million in venture capital financing in a single company gets lots of press coverage and lots of intrigue. But while the odds of getting VC are a bit better than those for Powerball, they are extremely low.

So if you want to play the odds for your business financing, best to look elsewhere and not get caught up in the lottery mania that seems to inspire lots of Americans to go searching for venture capital on Google.

 

 

Don Gooding

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