Docstoc

Finding Investors to Fund your Business

Document Sample
Finding Investors to Fund your Business Powered By Docstoc
					Finding Investors to Fund your Business



After preparing a well research business plan, the next most important thing that an
entrepreneur should do is to find the funds you to get the business off the ground. Funding
should start with the entrepreneur. If you are unwilling to put your own cash and risk into your
business, do you think anybody else will? Funding can also come from sources like friends and
family. Finally, you can look for external funding from investors and lenders. However, most
banks are usually unwilling to fund new and startup ventures that can’t provide them with two
to three years of financial statements because they are known to have high risk level.




In addition, banks are particularly risk adverse and are not so open to investing in small
businesses during recession. This leaves two second round financing choices for business
owners—funds from venture capital and angel investors. How are these two different? Venture
capital funds invest in companies that are in the startup stage of the business but they can be
defined as pooled investment that uses funds from third party investors like wealthy individuals
and investment banks to invest money in business projects. A venture capital firm is a company
investing the money of its shareholders in startups as well as other risky but profitable
ventures.

Angel investors on the other hand are wealthy individuals who aid entrepreneurs during the
startup stage by providing them with seed capital or the capital needed in starting and growing
a business. Angel investors are more like your friends or family than a bank or venture capitalist
because angels give more importance to the entrepreneurs instead of the business model.
Usually, angel investors are entrepreneurs themselves and they like extending help to upcoming
entrepreneurs by providing them with the required capital and mentoring to run their business
successfully.

				
DOCUMENT INFO
Shared By:
Stats:
views:12
posted:1/10/2013
language:
pages:1
Description: After preparing a well research business plan, the next most important thing that an entrepreneur should do is to find the funds you to get the business off the ground.