Tips for getting investors for your small business
Have you ever wanted to open your own business? Have you dreamed about opening your own business but can't seem to find people to invest in your business? If you have ever dreamed of opening your own business then you have probably thought of the fact that you were going to need some kind of money to get your business up and running, what you might not have realized is that this money is actually referred to as capital. In the business world without capital you are not going to be able to open and run a successful business, which is why so many people don't even try to open their own business. But then you have people who look at ways of raising capital to open their business. These people will approach banks for loans, sell their personal assets, take out a second mortgage on their home or anything else that they can think of to open up their business.But the problem is that not everybody can get financing through the traditional methods so they need to approach investors to get money for their small business. Basically there are two types of investors that you can approach for your small business venture capitalists and angel investors.
Here are some tips to keep in mind when getting investors for your small business.
One thing that you need to know is that not every business will use a venture capitalist to obtain financing. The reason for this is that most of the time that venture capital is used is when the business is a risky type of business or a business that has a limited operating history and cannot get funding any other way.
Most venture capital comes from wealthy investors, financial institutions and investment banks that pool their money together to use as venture capital, most of the time these groups of people form a type of limited partnership. So basically what you are going to need to do is to develop a sound business plan so that you can approach venture capitalists to get them interested in investing in your business ideas so that you can get your business up and running.
Angel investors expect an average 26% annual return at the time they invest. They also only believe that about one-third of the investments that they make are likely to result in a substantial capital loss, which means that most of their investments are going to give them some kind of a return on their investments.
Most of the angel investors are actually devoted to small, mostly start up businesses that have less than twenty employees. In fact angel investors are actually the largest source of external equity capital for small businesses.
Angel investors actually only accept an average of three deals out of every ten that they look at. There are numerous reasons for them only accepting three out of the ten deals but the most common reasons that they give for rejecting any of the deals are insufficient growth potential, overpriced equity, lack of sufficient talent of the management, and/or lack of information about the business owner or other key personnel.
So basically if you are looking for an angel investor or a venture capitalist it is a good idea to make sure that you have everything lined up. These types of people are not going to invest money in just any kind of business opportunity; basically they are only going to want to invest in something that is going to give them something back in the future.