Editor's Note: Learn from a panel of experts and entrepreneurs who have successfully financed their own ventures and are helping others do it at the Thought Leaders Live 2013 event May 29, in Long Beach, Calif. Event and ticket information can be found here.
Q:My company needs an influx of operating revenue. How do I find investors for my business?
A: Your first question should be, "How much do I need?" If we aren't talking millions of dollars, friends and family are some of the most dependable resources for any entrepreneur. If you've already tried that, you should consider other options, such as a small-business loan, an angel investor or venture capital.
Finding investors is really a matter of networking. Unless you get lucky, it's going to take some time. For starters, talk to your banker, who may want to offer you a loan, and may also know potentially interested investors. You should also talk to your chamber of commerce, as well as any business organizations you belong to.
Not surprisingly, the internet can help you find angel investors and VC groups fast. Check out the National Venture Capital Association's website. Under the "Resource Area" tab, you'll find numerous descriptions of, and contact information for, regional VC associations, such as the Atlanta Venture Forum and the Colorado Venture Capital Association. Angel investors aren't quite as organized, but there are organizations that match up angel investors and entrepreneurs. Active Capital is one national angel investor organization. Angel Capital Associationis another; it will lead you to approximately 200 regional sites across North America, including Alliance of Angels, which is based in Washington state and focused on high-tech operations.
You could spend all day on the web looking at the organizations available before you even decide who to contact. But be warned: Unless you have a business plan, you're not going to get far. Everybody--save maybe your Uncle Mel, who might not be as discriminating--will want to know what you intend to do with the money that you want invested in the company. They're going to want a solid five-year business plan that includes projections and details how your business makes money, who your customer base is and how you intend to market to them--almost no detail is too trivial. So before you search for investors, buy some software or a book that can help you write a plan, or go to an organization like SCORE or your local Small Business Development Center and ask for help with writing a business plan.
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- Choosing Between Debt and Equity Financing
- Funding Outside the Box