When you start a business, you need help. Often, you need help fast, or you're going to close your doors.
That sense of urgency often leads entrepreneurs to jump on any type of assistance that's offered. But it can be worth taking a little time to find exactly the right kind of help for your business. First off, let's talk venture capital. Most entrepreneurs would be extremely grateful if any VC firm at all would decide to take a stake in their company. But it turns out that jumping on just any old funding train may lead your company onto a side rail, instead of chugging it straight to success.
A study from University of Indiana professor Xuan Tian found entrepreneurs who found venture partners farther away than 25 miles ended up raising smaller amounts. The probable cause -- the far-off venture funders didn't provide as much day-to-day assistance for growing the business. The funders also didn't get as fired up about the companies with less in-person exposure to the business, so they wrote smaller checks.
If your company is outside the big VC centers of Silicon Valley, New York and Massachusetts, this may require some creativity. But there is venture money to be found in many smaller cities, too, if you look for it.
Next, let's take a look at business incubators. Again, many startups would give anything to land the free office space, services, and support an incubator would give them. But rather than any old incubator, it might be smarter to find a niche incubator that specializes in your industry.
It's a coming trend, for an incubator to focus on a single industry. An example is Sparkseed, a two-year-old San Francisco incubator that takes only startups tackling social or environmental problems.
The National Business Incubation Association estimates only 5 percent of incubators currently have a niche focus. But it makes sense -- the incubator advisors can offer much more relevant and useful assistance, since they have industry-specific knowledge.
Where have you found the best help for your business? Was it located nearby, or from experts in your industry? Tell us about your experience.