Blog 9: Show me the money
Monte and Denise Gisborne, co-owners of the world’s first commercially available solar-powered recreational boat called the Loon, are finally ready to realize their vision for the business thanks to their new private investors. After 2 years of searching for investors who would support the commercialization of the Loon, the Gisborne’s feel like they are finally ready to take flight. The Gisborne’s situation is a dream for many entrepreneurs, but where do you even start looking for funding?
Many entrepreneurs believe they have the golden idea, the right people and resources in place, and have even successfully demonstrated demand for their product in the market, but they just need a financial backer to see their dream come true. This is where it can seem like a black hole – where do you even being to find financing? There are a number of investor alternatives and this is typically the path to follow when looking for early-stage funding:
1. Love Money – this is usually money from family and friends; start here first in order to get your business idea off the ground.
2. Banks – yes, each of the traditional giants has their own small business division, but if you are going to ask for financing, they typically want to see a business plan, some financial commitment of your own, and finally, a personal guarantee.
3. Angel Investors – this is a group made up of private investors who are looking to invest $50,000-500,000 (in exchange for equity, of course) in early-stage businesses with aggressive growth potential (you can check out the Toronto Angel Group at http://tvg.org/toronto_angel_group for more information on their application process).
4. Venture capital or Private equity – these folks are typically looking to invest $1M and above, but beware they will also want to take a significant portion of the equity in your business in return. They can often provide access to critical industry contacts and expertise, but it doesn’t come without the stress of delivering to ambitious growth targets (the Canadian Venture Capital Association provides a listing of firms at www.cvca.ca).
So for an entrepreneur new to the world of financing, those are the basics in terms of where you can go to for funding. Although, it will depend on your intention for the business – do you want to bootstrap the company or realize aggressive growth? If your plan is the latter, then you can skip steps one and two and go straight to Angel investors. Keep in mind, this list is by no means exhaustive, but will give you a simple understanding of the various financing alternatives in the market.
There will be moments when your business will need financing, and then there will be times when the last person you want to see is your investor or banker. If you want some advice – make sure your investor brings more to the table than just dollars. Look for opportunities where they can open the door to strategic partners or new accounts, see if they have experience growing a business the way you want to, or make sure they bring an expertise to the table that is desirable and missing from your business today.
Since finding the right investor can sometimes seem impossible, please share your stories of the financier or banker that was willing to see the potential in you and your business. The rest of us want to find out where to find them…
How are you? I am looking for an investor or investors who are interested in funding a small business start up. If you are interested, please let me know and i will send you by business propossal electronically. I have 25% of the total amount already, I am just looking for more support to complete the full funding.
Posted by: Michael nelson | January 21, 2009 at 11:59 AM