Study: Startup biz is cheaper than you think


Starting a business is cheaper than you think, according to an entrepreneurship study released this week.

Free office space is common, and public financing for small businesses can really pay off for those who qualify, according to the Entrepreneur’s Census, which examined 307 startups in New York, Boston, and Silicon Valley.

The study revealed that free office space is most common in New York City, where 42 percent of respondents said they paid zero commercial rent over the previous month. In contrast, less than a quarter of respondents in Boston and Palo Alto, Calif. said they paid no rent.

Public financing programs for small businesses can also yield more cash than raising funds privately, the study found. The median capital raise from public sources was $2 million as opposed to $275,000 from private sources, and nearly 70 percent of respondents that had sought public financing received some. However only 13 percent said they had done so.

There’s a lot of public financing out there, especially since state and local governments are creating programs to boost their economies, according to Matt Shapiro, the study’s creator. However getting access to it requires patience.

“My speculation is that people aren’t aware of public funding options and/or they discover that it takes a little longer than private funding options,” said Shapiro, who also leads Tooble, an education software venture. Lead times for public grants could take as long as a year, he added.