How to Find Investors by Selling Equity

Need Investors?

One of the fastest ways to finance your business is by selling equity in your company. This basically means getting money from investors by selling them a part of your company. This can be done in several different ways. Each way has it's benefits and setbacks dependent on how long you have had your business, and how much control of the business you want to keep to yourself.

Things You'll Need

• A small business that needs financing.

Instructions

How to Find Investors by Selling Equity

1. Find an Angel Investor. An Angel investor is someone who takes the risk to help fund a brand new start up. In other words an Angel Investor will give you the money needed for your start up costs in return for either their money back plus interest or partial ownership in the company.

2. Find a Venture Capitalist. Venture Capitalists are usually firms that represent the people with the money. They take the funds that have been given them from their clients and then invest them into opportunities that could have a potentially high return. Venture Capitalists will not usually give you money unless there is a very high percentage that your business will succeed.

3. Look into a small business investment company. SBIC's take private investors money with some government money and invest it into businesses that have already proven themselves to be profitable. This is a good option to look into if you have already been successful and are looking for a way to expand into other markets.

4. Look at private placements. This is when you offer shares in your company to private individuals. This means that you are not offering your stake in your company publicly but just to select individuals at your discretion.

5. Try initial public offerings. Public offering is when you sell shares in your company to anyone in the form of stock. This is the option where you will lose most of the control of your company since once your stock is publicly traded you not only have to answer to your own board, but also the SEC and state regulators.

Tips & Warnings

• As with anything in business, you should make sure that you have a quality product as well as quality business ethics. Once you have investors, you have to protect both your interests as well as the financial interests of your investors.