How to Find Private Investors for both small and large businesses?
Private investors are a handy option when it comes to help establish a small business of our own. They are definitely a better option than going for big investors and offer many more benefits that you would lose out on if you opt for big investors. It is quintessential to have some kind of funding to keep your business up and running and to find private investors is a great option. But businessmen are always reluctant and even hesitant to opt for private investors because of the reliability factor. It is difficult to find investors in the market who are trustworthy and who offer top quality service.
The question that pops into one’s head at this point is that where can one find private investors to finance one’s business. A solution may be found in asking people from within your family or you friend circle to invest in your business. This is a great option as it provides your business great flexibility. But one should always keep in mind that if an unfortunate event was to occur, one should try their level best and avert imposing their share of bankruptcy with such private investors as it would stain their relationship in the long run.
You will find Private investors such as the Angel investors, help establish and run small businesses by investing private capital of their own to the tune of about $ 500,000. Looking towards venture capitalists is another option. They tend to invest more than the Angel investors. One should know that venture capitalists would ask for better credit along with an excellent and well planned business structure. They would also want that the businessman should agree to the structure and plans that they are offering and thus one would lose out a little in terms of flexibility in this option. Venture capitalists are usually extremely particular about businessmen complying with their terms that have been laid down along with a meticulous process of interest rates which are usually higher than that of Angel investors. Investors with venture capital are usually on the lookout for people with a business that is already established to some sorts and it is a difficult task to persuade and convince them to give you a chance. Even though they might refuse to help you, it is worth a try as they might give you some other leads to help finance your business. Private angel investors provide finance to your business but are constantly in touch with you to ensure the safety and proper usage of their investment.
The process to find a private investor is definitely not child’s play and one must be committed to devote a large amount of time in researching and selecting the best of such investors that are available on the market. It is a process that may even take a couple of months due to issues of credit and various other documentations that need to be done. After a thorough analysis of your business plan which should contain excellent statements of finance and marketing structures, one can be confident while approaching private investors so as to present a good case in favor of your business. These investors are after all looking for some profit themselves and if you cannot project your business to be promising one, it will be extremely difficult to get a good investor. Having a concrete business plan is the first step that ensures getting a good private investor. It is important for the businessman to be confident and not be shy or afraid to ask people. One may be surprised to find the number of people willing to help if one just finds the confidence to ask them in the first place.
Lending clubs are another great way to get some quick money to set up one’s business. These lending clubs are comprised of a group of investors who lend money to businessmen having good credit. They are excellent option for anyone looking for a private investor and should be the starting point. Commercial banks are another option. Your local commercial bank will have many brokers around who have a truckload of information regarding the best private investors on the market. They can even help you out by not only providing you with such information but at times, also by helping you make contact with such investors. Some people also resort to look for partners to finance their business and also keep looking for private investors. These partners have the freedom to be a silent spectator to the mechanisms of the business or to dirty their hands themselves. But in such a case, one must be careful and should have legal documents regarding the agreement and partnership drawn out from before to avoid disaster. One can look for such investors through extensive networking and socializing and also by joining different chambers of commerce.
Getting you local banks to finance your business through loans is a difficult, if not an impossible task to achieve and thus keep looking for private investors is a much preferred option. But in these times of recession, these investors are ever so cautious as regards their money and as to where they are putting it because the process of investment is not easy and involves a great deal of risks. Simple having a mind blowing idea or an excellent product is not good enough these days to attract investors. The latter want success and you must be capable of projecting that your plan would attract a large market and generate huge amounts of profit. Having any kind of proof for success in the past through satisfied customers and other contracts are another way of convincing the private investors. Having an attorney to manage your business affairs is also highly recommendable. They act as the perfect intermediary between yourself and the investor and can also act as your personal adviser. This projects a more professional image of both you and your business in front of the investor and increases your credibility as well.