• Finding Investors (For Businesses) – What You Can Do

    Category: Venture Capital Financing


    Funding is the most pressing problem in any kind of business. Business owners always think of ways on how to make their businesses grow and expand. Ideas are easier to arrive at than solutions on where to find the money to fund such venture.

    Finding investors is a very hard undertaking. The market is never short of investors but your potential to attract a number of them depends on their chances of getting a return according to their calculations. You have to be able to persuade them that their money has a higher chance of multiplying in your business than anywhere else. You have to provide sound evidence that your business can protect and take care of their investment.

    The task of finding investors isn’t so hard when you have a definite business plan to present. It is very crucial for investors to know what your future plans are for the business. You simply cannot approach them empty-handed. You have to design your plan realistically and never make one up when you are confronted with candid inquiries. A sensible business plan should map out well-researched strategies that are relevant to the current flow of the market. It would help you get your message across more clearly if you will indicate how competitors work and your plans to outdo them or make your company’s performance better than the rest of the similar businesses in your industry.

    Finding investors will take some time. A bank is a good starting point. Your banker can offer you a substantial loan that will get you started and might also know people who are willing to invest on businesses like yours. If you belong in any business organization, you can use your connection to get inside information and ask people who might know someone interested. When you have found potential investors you’ll be able to convince them more easily if you present them with terms and agreements that they might find reasonable and works for the benefits of all parties involve. Just as important is an even-handed exit strategy for divestment.

    A written agreement realizes a lot of things. It puts across the message that you are taking investors seriously and are prepared to do important deals. An agreement puts investors’ minds at ease because it clearly drafts what they can expect from the deal if they’re willing to make one. It protects your interests as well as your investors’ and the document should be legal and binding.

    Another crucial presentation you have to give to your investors is a track record of growth. Finding investors (for business) is an elusive hunt if you won’t be able to provide proof that your business is doing an uphill climb on the chart. Your investors should get the impression that your business is stable and capable of maintaining a constant increasing growth.

    It doesn’t have to be a super impressive statistics but it should be enough to persuade investors that a return of their investment is possible. It will also show them that you work hard to set and meet your goals. Financial statements should go with your record. There should be nothing in there that will indicate your company needs financial salvation. Be honest with all of your dealings. Investors aren’t looking for huge numbers in financial statements. A promising investment is all they want. Approach your accountant to help you arrange your financial situation more attractively.

    Business Investor FAQ:

    Question: What is the best way to find business investor’s funding partners for a business?
    I wanna brand off from the company I work for and start my own business. I am 100% sure it will work no doubt in my mind. I want to find an investor to fund the startup. It does take a little to start it up but you’ll get your initial investment back in months and from that point on it will just be profit.

    Answer: There are two ways of doing this.

    1) There is a huge network called Jump Start which has 50 Angel Investors. Their job is to find start up companies like yours and fund it. Last year they invested 18 million dollars in various start up companies.

    2) You may want to sign up on GlobalLinker. They have a growing small business network and you should be able to find investors and partners. They offer free business tools and global networking platform.

    Question: Business Investor?
    Looking for business investor for new fashion line. What channel to go?

    Answer: You might want to try collecting trade magazines and calling numbers or getting contacts from your friends.

    Question: Does anybody know any investor/business partner that would like to invest in my startup Company?
    I’m looking for a real investor/business partner that is willing to invest in my company. It was established in 2002. I have great experience with Manufacture in Hong Kong. I Have four years of experience as a graphic designer, I design my own clothes by hand on a sewing machine. Also I have my own business plan ready for review.

    Answer: It depends on where you live, but most states’ departments of commerce have economic development mandates. To this end, these departments have people who are trained to help develop small businesses.

    There are small business development consultants, usually associated with community colleges and the land grant universities, that have classes and all sorts of expertise to help you.

    Since you already have your business plan, and a sample product, contact the SBDC in your area. Once you get to the point where investor is your next step, they know who is interested in investing.

    One more idea is to check with your county extension agent at the courthouse or government center. They are in the phone book. Extension is a service of the USDA and your state’s land grant university. Textile businesses are one of their specialties.

    Question: What would be a good way to go about looking for a small business investor?
    Is there a site or forum that is legit for this. I have a great business idea in the medical field.

    Answer: Medico-business associations, consultants, angel investors, joint ventures are some avenues to try for funding. A lot of scientific associations & government bodies too can help if you can clearly demonstrate commercial viability of your idea.

    Question: Is a business investor entitled to part of the business?
    If I own a business that I just started and someone invests $3,000 for a profitable return, after I pay them do they have any claim to the business? a verbal agreement was made that they would get 10% of profit atleast until they were paid maybe 2,000 over investment, and after I pay him can he take me to court for more?

    Answer: Verbal contracts are hard to prove in court. Yours will be particularly difficult because you are using words like “at least” and “maybe.” It sounds as if he was looking to be an investor, and you were only looking for a loan. That is not good, because there was no meeting of the minds about intent.

    Question: Can a minor (say 17) enter a legal contract with a business investor?
    Say a 17 year old filmmaker is offered money from an investor to finance a film. Would the minor be able to take the money and sign the necessary paperwork and have that hold up in court?

    Answer: No. Minors can not be bound by contracts as they don’t have the capacity to consent. However, if the minor acts on the contract AFTER his 18th birthday he may be said to have affirmed the agreement and therefore be held to the terms.

    Question: I need help finding investor business loans?
    I’ve heard of websites that offer business loans to entreprenuers from individual investors.

    Answer: There are many, though you need to approach them with a business plan, otherwise you are spinning your wheels. Many professional writers exist and are affordable. Try either Masterplans or VanSwiss. Both have good reputations and are affordable.

    Question: What percentage of a business do you typically have to give to an investor funding a business idea?
    I’m going to be starting a business and I have a person that is willing to handle all of the development costs etc. Since it is an online business, the start up costs are pretty low for a business, under $10,000 definitely, probably under $5,000.

    Answer: In a TYPICAL venture deal (yours is not, of course, since it’s so small), it would be pretty common to give seed round investors 20-30% of the equity. Another way to look at it is that private equity investors expect to get 15x-20x their investment if the company is very successful. If your company (assuming success) might have a market cap of $1MM, then 20x on a $5M investment would only be 10%. It’s usually a negotiating process in any case.

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