Typically, the hardest thing about raising private capital is that you need to find investors for your business. Initially, the best way to go about doing this is to become a member of your local chamber of commerce. There are typically wealthy individuals and local business leaders that frequently make investments into small businesses that within their geographical area. Most angel investors like to have their small business investments within fifty miles of their homes. If your business is already in operation then you should most definitely seek to find private investors within your local area. If you are able to do so effectively then your ability to retain a significantly amount of control over your business will increase substantially.
One of the other ways that you can locate capital for your business is by beginning your search on the internet. However, finding angel investors on the internet can be a tricky process since there are many sites out there do not provide the results that they promise. As such, you are going to want to focus your searches specifically on angel investor networks that hold themselves out as professional investment groups. These organizations consist of wealthy investors that band together in order to provide substantial amounts of capital to small businesses. Most importantly, these groups can provide you with additional rounds of capital if your business is growing very quickly. There is usually a managing member within an angel investor group that is able to screen deals on behalf of their organization.
Finally, you can directly approach venture capital firms that can provide you with the capital that you need for your business. However, most venture capital firms and private equity groups only seek to make investments with a face value greater than $5,000,000. As such, if you are not seeking this much capital then you may want to turn to using a small business investment company. These middle market firms seek to bridge the gap between angel investors and venture capital firms in that they provide capital injections ranging from $250,000 to $3,000,000. Additionally, many of these firms are licensed by the Small Business Administration and they may be able to provide your business with a fixed rate loan rather than buying a portion of your company. In fact, many small business owners initially received their capital from these types of firms in a hybrid fashion. A portion of the capital they received came as a debt investment while the remaining funding was through the sale of shares to these aggregated groups of investors.…Read more