Fast-growing companies have a new online option for finding investors. OffRoad Capital (http://www.offroadcapital.com) has created a private equity investment marketplace on the Net, matching established small businesses with private investors. Entrepreneurs can raise $3 million to $15 million online.
Acting as both a banker and an investment community, OffRoad's goal is to sell pieces of small companies to individual investors, offering an alternative to traditional financing such as banks. "The private capital markets have been effectively closed to most individual investors, even those with a relatively high net worth," says OffRoad founder, chairman and CEO Stephen D. Pelletier.
"On the other side are many solid, privately owned, growth-oriented companies with identifiable exit strategies that haven't had access to creative or sophisticated financing options. Our research found these two groups are frustrated by limited access to capital on one side and deals on the other."
According to Pelletier, companies in need of financing have to beg--relying on traditional lenders or the off chance of finding an angel investor. Even with luck, angels and private financial lenders will seldom cough up more than $2 million, even for the most promising enterprise.
OffRoad is coupling its new Internet-based investor community with its own broker/dealer subsidiary to speed up the investment process, presenting screened and structured financing opportunities. By the time investor and entrepreneur meet, they've already been prequalified by the company.
The company is looking for established small businesses with an income stream and "well-defined characteristics for investing--" that is, revenue growth in the 20 percent range; demonstrated successful income- raising efforts through traditional sources; willingness to comply with disclosure and quarterly reporting; and clearly defined exit opportunities for investors.
If funding in the million-dollar-plus range is a little out of your league, take heart. Smaller high-tech and medical science start-ups looking for seed money should check out Garage.com (http://www.garage.com), a company that not only offers a ton of resources for small, high-tech entrepreneurs but which recently launched a monthly "investor showcase."
Kurt Samson is a freelance business writer and public relations consultant in Annapolis, Maryland.