- 1). Start with friends, family and acquaintances. The best and easiest sources of capital are the people closest to you. Make a list of personal connections. First, approach the people actually know you or know of you through friends and colleagues. Approach individuals in your social network like church groups, college alumni or work associations. Use online social media networks such as Facebook, LinkedIn and A Small World in an intelligent manner. Don't just post that you're seeking money on your profile or "wall." Message individuals who you know with a personal note. Consider even offering them a commission for any referrals who end up as investors.
- 2). Consider a loan. A business loan is one of the easier sources of capital, if you have good credit and a solid history with your bank. Loans are appropriate sources of capital for all types of businesses. You will typically need to have at least three years of experience in the same area of business for which you are seeking a loan. If you do not, you will most likely need to put up personal assets as collateral. Make an appointment with your own banker to determine the precise requirements. Also, check out the Small Business Administration's (SBA) "guaranteed loan programs." To qualify for these loans, you need to be part of a particular group of borrowers. These include living in an under-served community, veteran, exporter of goods and many others. Check the program's website for further details (under References).
- 3). Approach angel investors. These are private investors who provide seed financing to new businesses. They typically seek investment in technology and high-growth companies that have realistic possibilities of producing a very high return on their money. If you are looking for capital to open a restaurant or start a business, this is not a good source of capital for you. Inc. Magazine offers a good profile of some major angel investors and angel investor networks (see References). Also, check out GoBigNetwork.com, a professional network listing thousands of angel investors.
- 4). Approach venture capitalists. This is financial capital provided to early-stage, high-potential companies. Venture capital is what started companies like Facebook and Google. Unlike angel investors who are willing to invest small amounts of money, venture capitalists are looking to make investments of hundreds of thousands and millions. Venture capitalists are always looking for the next big thing in technology, the medical field, Internet companies and other cutting-edge fields. To receive serious consideration from venture capitalists, you will need a highly unique idea, a solid business team, a realistic plan to achieve profit and a beta version of your company. You will have to show your business working in the real world, not just on paper.
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