Monday, September 28, 2009

Where's the Money?

The most common question I get from entrepreneurs involves funding. The second-most-common is about marketing.

Let's talk funding. Start up entrepreneurs often fund their own ventures through existing assets or obtaining bank loans. In this economic climate, bank loans have become more difficult than ever to get. Plan on having to put up your home or other large asset as collateral if you're a brand-new business owner.

Another option is to raise money by asking people you know – friends and family members – to loan you the money. Make sure you have written agreements with these people.

Outsiders, such as venture capitalists or “angel” investors, do not typically fund early-stage business concepts unless their backers have strong, successful track records in the industry.

There are certain angels who specialize in contributing “seed” money to promising start ups. If you can demonstrate that your new company has excellent potential, you might consider sending your business plan to those kinds of investors.

The TechCoast Angels, an investor group based in Orange County, CA has recently started a new SeedTrack program to provide financial and planning help to early start up firms with "game-changing ideas for big and meaningful problems."

To find an angel investor group near you, visit the Angel Capital Network.

You should also ask your accountant or attorney for referrals, since business advisers often help match entrepreneurs with investors.

5 comments:

  1. Thanks. This information is invaluable. I'm in the very, very beginning planning stages of a start-up so I'm just drinking it all in.

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  2. Wow - that's exciting Petrea. Let me know if I can help with additional resources.

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  3. I'm working with the group at the Women's Club boot camp (you may have heard?). I'll bet you can help, we're already linking to you like crazy.

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  4. That's great! I may be a judge for the business plan competition that group is holding later this year.

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  5. Then I'd better get a move on.

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