How Feasible is Receiving Venture Capital Funding?

Ella Richardson, Walter Payton, Junior, Spring 2025

Venture capital is a form of funding provided by private firms to support promising start-up companies. Firms backed by venture capital make up almost half of initial public offerings (IPOs), or private companies first selling shares to the public, in the United States. However, fewer than 0.5% of firms founded in the US each year receive VC financing (Janeway, 2021). So does this mean it is nearly impossible for most startups to gain funding through venture capital?

Shawn Sommer, Director of Licensing and Technology at Lonza, mentions that “getting connected through personal networks can make a big difference”. Venture capital firms are primarily concerned with the reliability of potential investments, and the decision process is much easier when these startups are endorsed by someone already respected in the field. In addition, nearly 20% of VC firm deals come from referrals by other investors, so that these firms can proactively seek out new companies of interest (Gompers et al., 2021). However, Sommer also emphasizes that “it is absolutely attainable for first-time founders and even students [to] raise capital.” He highlights curiosity, persistence, initiative, and being willing to fail as notable shared characteristics among these people.

Chris Kornfeld, Emerging Biotech Consultant at Merck KGaA, agrees with this sentiment. He explains that it is important for those seeking VC funding to “network as much as [they] can” and to “not be afraid to talk about [their] progress, even if it’s small – other established professionals love to see that you’re not just dreaming, but actually doing.” He also addresses an additional concern of many innovative founders of tech startups who are interested in remaining in “stealth mode”, or keeping all operational information private from the public and possible competitors. In this case, founders may not be able to demonstrate capital they have raised. Kornfeld, however, doesn’t see this as an issue. “As long as founders can clearly explain the problem they’re solving and why their approach is different, they don’t need to go public to raise money.” In the event that they need to share sensitive product information, NDAs exist to help protect founders’ ideas.

While venture capital may be rare, it is entirely possible for founders to receive secure funding with persistence and the willingness to network.

Works Cited

Gompers, Paul, et al. “How Venture Capitalists Make Decisions.” Harvard Business Review, 1 Mar. 2021, hbr.org/2021/03/how-venture-capitalists-make-decisions.

Janeway, William H., et al. “Venture Capital Booms and Start-up Financing.” Annual Review of Financial Economics, vol. 13, no. 1, 1 Nov. 2021, pp. 111–127, https://doi.org/10.1146/annurev-financial-010621-115801.

Chris Kornfeld - Emerging Biotech Consultant

Shawn Sommer - Director of Licensing and Technology