Crowdfunding is increasingly becoming a popular alternative for startups to raise initial capital, particularly in sectors that require less funding. Startups in the food and drink industry, for instance, raised 36% of their initial capital through crowdfunding, while those in the technology sector raised only 9%. The lower uptake in technology could be due to the higher capital requirements in this sector, making venture capital a more attractive option.
Venture capital, on the other hand, is highly prevalent in the technology sector, with 40% of all venture capital going into tech startups. This is followed by biotech, which receives 18% of the total venture capital.
It’s also interesting to note that crowdfunding and venture capital are not mutually exclusive. Many startups initially raise funds through crowdfunding before seeking venture capital. This strategy allows them to validate their business model and demonstrate market demand, making them more attractive to venture capitalists.
The choice between crowdfunding and venture capital often comes down to the sector, capital requirements, and the startup’s growth plans. While crowdfunding may be a good fit for some, others may find venture capital more appropriate for their needs.
Go to source article: http://www.theequitykicker.com/2014/09/02/crowdfund-raise-vc-breakdown-sector/