• How to Find All the Angel Investors and Venture Capital Financing You’ll Ever Need!

    Category: Venture Capital Financing


    The once definitive line that would separate hard money and private/angel financing has merged into a hybrid of sorts in the past few years. As the economy has taken a dive and structured private lending firms have felt the crunch we are finding many of these lending solutions closing its doors and re-opening as privately owned and managed funding options with an interest in both lending and seed investment.

    Approval decisions that were once made by a group are not being made by an individual or duo with an eye toward optimal capitalization with both short term and long term agendas. As investors are, now more than ever, trying to get as much bang out of their buck, entrepreneurs are in the precarious position of accepting funding from virtually any and every enterprise that is making an offering. That said, it is more important now than ever to swing open your mind to the possibilities of mass exposure of your opportunity to the investment world.

    The best way to do this is to simply put your business in constant and automated ‘introduction’ mode so that you can be found by the money-men. The best way to do this is to heavily investigate the venture capital industry for executives who have created offshoot programs that have deviated their process from the traditional path of simply approving or declining a transaction.

    There are many VC professionals who want to capitalize off of the projects that their firm cannot accept due to underwriting criteria and industrial genre specialization so they are starting these small but well managed financial source databases where members can place their transaction directly in front of thousands upon thousands of angel investors, private investors, hard money lenders, venture capital firms, private equity firms and other alternative finance solutions.

    These websites are now the hottest thing in the capital markets and will continue to grow because of the high success rate of individual executives and entrepreneurs who are able to find multiple streams of financing options with the click of a button.

    If you are seeking Angel Investors, Private Investors, Institutional Investment Capital, Private Equity or any type of financing for your company check out Angel Funding Project at http://www.angelfundingproject.com they have great funding options, it’s run by people in the venture capital industry and there are tons of free downloads

    Venture Capital Financing FAQ:

    Question: Venture Capital?
    I run a consulting firm specializing in helping large US and International contractors and construction owners in the construction industry in the areas of pre-construction and project management. The business is generating income but I want to expand the model and develop a utility management tool (software) that reflects my business philosophy and approach. In order to do this I need financing, but I don’t want to take a loan, I prefer equity based financing. Any ideas where to start and how to approach this?

    Answer: Unless you deal with “angel investors” (rich folks who like to invest in speculative deals and, as a rule, are passive investors), you will not likely get straight equity financing from anyone for an early-stage venture.

    Most VCs, if they’re interested, will want to invest via secured debt, which is then convertible into preferred stock. Also attached to the money will be budgets, board seats, and oftentimes management control. Expect VCs to be actively involved in your business, from both a strategic and an operational viewpoint.

    The days of straight equity financing for startups is – as a general rule – long gone, so I suggest you tweak your realistic expectations slightly if you are going to deal with professional VCs.

    Question: Capital Venture Financing?
    I would really appreciate a good response to this question. What are the current prospects of Venture Capital Financing?

    Answer: There are a lot of startups getting funded. One good resource is a web site called Discoverion. I think it is relatively new, but seem to capture a lot of useful venture information.

    Question: How is venture capital financing accounted for in balance sheet?
    I imagine if the financing is structured as a convertible loan, then the money is added as a liability. But if the investment is in return for common shares, how is the transaction recorded?

    Answer: DR – Cash; CR – Capital stock (at the par value); CR – Additional paid-in capital (at any excess to par value)

    Question: Do you think I could get an entry level job with a Venture Capital Firm?
    I plan to go to UVA and get a degree. What degree should I get for venture capital? (economics, undergrad business, or finance?) I think one of my strongest suits is my international capability. I know English, French, and Chinese fluently, and have passable Spanish, Arabic, and Hindi. Where could I get an entry level job, how much will it pay, how fast does it promote, and what is the possibility I could actually get one?

    Answer: Yes, absolutely. Finance, economics, and accounting will all work. Depending upon your interest and abilities, other majors may have appeal. An MBA is a must though.

    Keep in mind that connections and networking matter as much as or more than the degree and GPA. Use your time wisely at UVA. You have excellent opportunities to connect with and impress (1) alumnae, (2) professors, (3) administrative personnel, and (4) other students. Seek everything that interests you while in college and when something strikes you that (1) you like and (2) you are good at, milk the connections. The best opportunities (and jobs) will always come from your network — the better the network.

    Question: I have a biz idea. Where do I get venture capital or an “angel” to finance it?
    Please, don’t tell me to go to a bank, or a friend or a family member. What I need is an actual investor that likes the idea and wants to get it off the ground.

    Answer: The best route is to locate and research what Angel or VC funds are in your area. Further you need to determine what area your company falls under. You need the VC as much as they need you. So find a group that has resources and experience within your field. This is a mutually beneficial relationship. So during the pitch process you should not be the only side of the table selling themselves. Most VC firms are specialized, there are very few firms that are generalized, however the big names like KPBC or Warburg Pincus are so large they have their fingers in everything. You will need to write a business plan and determine how much money it will take to get you off the ground. If it will take less than 1 million then an Angel fund is the best route. More than one million then VC might take a look at you. Most VCs are looking for businesses that are in place and have some history of operation. The VC/PE world has changed drastically over the past years. Much tougher to get investments especially in the seed round.

    Question: How to finance working capital for a service based start up company without going to venture funding?

    Answer: Start-up funding is tough. Without sales and/or significant assets, banks are generally not interested. You might check with a local economic development agency to see if they have start-up loans. Otherwise, you are probably left to your resources through your own contacts (otherwise known as friends and family).

    Question: How was venture capital created?

    Answer: It was begun by people desiring to take a “risk” in a particular business with the idea of a high return of their investment money. If the business does well, they get a better return than “normal” markets and much better than savings instruments.

    They are necessary for many small business to get up and running. If the business fails they get nothing back. But if it succeeds like Microsoft for example, when they sell their interest in the company, the sell it for many times what they invested.

    Question: Strength and weakness of venture capital?
    I’m doing a project on capital financing. Would like to know of the ways a firm can raise capital and the strength and weakness of each ways.

    Answer: 3 ways to raise capital:
    1) Loans
    2) Bootstrapping (self-financing strategy which is usually a combination of penny-pinching, pulling in friends & family to help etc. )
    3) Venture capital

    Venture Capital’s Weakness:
    a) It’s an option limited to only businesses that VC firms find attractive. That cute boutique or auto-repair shop idea – won’t cut it. Only high-growth, high profit businesses need apply.
    b) You could lose control of your enterprise – literally! (See C)
    c) Goals for VC may be totally different than your goals (eg: going public vs staying private)

    Bootstrapping: My personal favorite but mainly limited it IP (Intellectual Property) or other talents the entrepreneur possesses.
    Weakness: Most folks can’t afford a manufacturing run or any major capital expense with their spare nickels.

    Loans: Good because someone else is giving you the funds to launch something you could never afford.
    Weaknesses: You have to a) get approved, b) pay them back and c) if you fail you still have to pay them back or go bankrupt.

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