How to Find Investors to Start a Small Business

People who invest in startup companies are known as angel investors and venture capitalists. As defined by AllBusiness.com, startup businesses may have only a detailed business plan and are in the earliest stage of development. Angel investors can provide anywhere from $300,000 to $5 million in financing for a start-up, according to Entrepreneur Magazine. Finding one of these investors may be simple, especially if you have the right contacts or know who to call, but getting funded means that you have to create a business plan and present yourself professionally.

Things You'll Need

• Telephone
• Computer and internet
• Business plan

Instructions

1. Prepare your business plan. Investors generally like to see that you have done your homework in terms of understanding the market. Create a section that specifically and in detail describes your product, service or invention. Create a section that talks about your background, experience and that of the other people in your startup company. Discuss your target market--the people to whom your business is aimed. Make a section each for talking about the competition you face in the market, a detailed marketing plan and how much financing and capital you need.

2. Network with people who know you. Talk to friends and family members to ask if they know of any investors. Ask your attorney, accountant, banker or lender if she knows of investors who might be interested in your startup idea or if she knows of any angel-investment groups. Entrepreneur Magazine--a monthly publication devoted to entrepreneurship and small business--recommends contacting these professionals because they may be in contact with individuals who have money and who may invest in startup companies.

3. Join your local chamber of commerce. Chambers of commerce connect small businesses with each other and host local meetings on a regular basis. Ask your chamber of commerce for the names of angel investor groups or venture capitalists. Or network with other small business owners at chamber meetings and ask others if they have ever received funding from an angel investor or investment group.

4. Call the director of a local Small Business Development Center. This network--funded in part by the U.S. Small Business Administration--provides resources, including capital, to small business owners in the U.S. Find the director's name and contact information for your local chapter in the Small Business Development Center state directory at asbdc-us.org. Speak with the director and ask for a referral to or help in locating angel investor groups.

5. Find a nearby college or university. Check with the university to see whether it runs an entrepreneurship program or a similar degree for students. These programs can sometimes attract angel investors or venture capitalists looking for new opportunities generated by the university and students. Contact the director or chair of the entrepreneurship program and make an appointment with him. When meeting with the director, talk to him about your start-up business and ask for connections to possible investors.

Tips & Warnings

• Contact the Small Business Administration directly if you are unsure of or can't find a nearby Small Business Development Center.

• Rehearse your business plan presentation before your meeting with investors. Memorize facts (i.e. financial projections, costs, etc) to help make your presentation smoother.

• Be prepared to give up a portion of your business--anywhere from 10 to 50 percent or more--to individuals and groups who invest in your company.

References

• Entrepreneur: Angel Investors
• CNNMoney.com: How to Find your Angel Investor
• AllBusiness.com: Business Definition for: Start-up

Resources

• America's Small Business Development Center Network: Welcome
• Inc: Angel Investor Directory
• United States' Small Business Administration: Office of Small Business Development Centers
• GoBigNetwork: Angel Investor Venture Capital