In looking to get your business off the ground, you’re probably tasked with one of the biggest “issues†with getting things started–finances.
You need a little money to make a little money, it’s just how this thing works.
[Related: 5 Ideal Reasons to Attend Entrepreneurs Summit]
In order to gain the capital you need, you must be tactful–as all investors are not created equally for YOU. For your particular business, with your distinct goals, you want to find an investor who can adequately fulfill your needs. Take a look at the cheat sheet below so that you may seek out the type of investor that best suits you. Decide and conquer.
Bank: Banks generally offer bank loans for entrepreneurs. The bank will likely assess your overall business, including your business plan, and a business proposal document stating the product or service you’re looking to offer, your financial projections, and plans to achieve goals to decide if they deem you worthy of a loan.
Angel Investors: Yes, this type of investor really could serve as your financial angel. These investors have the money to invest in you and will often do it on the simple merit of belief in your business. This may be an avenue to seek out if you’re having trouble finding other financing. These investments may come by way of stock or loan with investments ranging from thousands up to a few million dollars. The investors generally want a percentage of return on their investment, or partial ownership in the company. This could be the way to go for a startup looking for an investor who may be willing to mentor and actively engaged in your business’ success.
Venture Capitalists — This one may be a little harder to obtain as a startup as venture capitalists typically want to know that you’re tried and true. This means you have a solid business plan coupled with a high return of profit. Venture capitalists may go on to invest millions in your company, but trust and believe they are looking to secure equity capital, or a share in your company along with say in management decisions. Venture capitalist may also seek a hefty return on their investment, exceeding that of a typical interest rate.
Friends, Family, Colleagues: Believe it or not, friends and family tend to invest the most in startups. This could be the ideal way to go when starting out. Reach out to those members of your circle who wholeheartedly support your business and/or your vision and start there. Be upfront with these investors as your familial or friendship bonds may be on the line. Let them know the risk of their investment upfront and be sure to monitor expectations. Even with friends and family, a promissory note detailing the terms of your agreement may be necessary.
Find black investors and venture capitalists who want to invest in you at the 2016 BE Entrepreneurs Summit, May 4th-7th, Loews Hotel Miami, Miami, Florida. Â Register now.