Where to find the money
Try a friend, or family member, or a loan if you can qualify
Venture capital. Wealthy individual investors, known as angels, and venture capital firms differ from lenders in that they want a stake in your business in exchange for their money. But this kind of investor expects high returns, is concentrated in the high-tech industry, and also demands to play a more formal management role, including having a seat on your corporate board.
For some entrepreneurs, though, it's a plus if someone else wants to take over the day-to-day headaches of running a business. Pharmacologist Robert Raulli invented a new sterilization technology for medical equipment. He wanted to raise millions of dollars to develop his idea, so he networked with investors, who all told him again and again that he needed an experienced management team before he would get that much money. "I got the message," says Raulli. While several seasoned entrepreneurs and investors put together the business, Raulli faded into an advisory role. But he is happy with the way things worked out. "What I do best is . . . find innovative solutions to technical problems."
The Internet has made finding venture capital and angel investors easier (box). But you should also ask your local chamber of commerce or business development centers for names of local investors or venture capital firms. Roger Novak, cofounder of Novak-Biddle Venture Partners in Maryland, says to find out what companies they've helped. "Ask for references. Are they smart?" he says. "Will they coach and build the company?"
Whatever financing route you choose, in the long run it must be one that works for you. Starting a business is a very emotional and individual move. You are putting yourself, and quite possibly your livelihood, on the line. Pitfalls abound, so make sure you weigh all the options carefully. Your final choice should be the one that gives you the greatest odds of success.
Help is at hand
Some useful websites for the budding entrepreneur:
www.sba.gov/sbdc/sbdc near.html Where you can find the nearest small-business-development center.
www.accionusa.org This nonprofit organization can help with so-called micro loans for entrepreneurs who may not qualify for traditional loans.
www.mbda.gov For minority-business beginners.
http://acenet.csusb.edu You might find a rich individual, or "angel," investor here.
www.findingmoney.com, www.privateequity.com, www.nvca.org, www.springboardenter prises.org These are all sites where you can search for venture capital.
Help is at hand
Some useful websites for the budding entrepreneur:
www.sba.gov/sbdc/sbdcnear.html Where you can find the nearest small-business-development center.
www.accionusa.org This nonprofit organization can help with so-called micro loans for entrepreneurs who may not qualify for traditional loans.
www.mbda.gov For minority-business beginners.
http://acenet.csusb.edu You might find a rich individual, or "angel," investor here.
www.findingmoney.com, www.privateequity.com, www.nvca.org, www.springboardenterprises.org These are all sites where you can search for venture capital.
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