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Angel Investors
Venture Capitalist
Strategic Investors
Venture Debt
SBA
Making Your Pitch


Sites that have listings of Angel Investors:
vFinance
Garage

Sites that have listings of Venture Capitals Firms:
vFinance
Garage
Finding Money
VCAonline
Sites that have listings of Venture Capitals Firms:
Sillicon Valley Bank
Lighthouse Capital Partners
Western Technology Investment
Pinnacle Ventures
Small Business Association
 

 

Raise Cash To Fund Your COmpany

There are many sources you can access to raise cash for your business. This section discusses the pros and cons of each source. In addition, this section gives you links to existing web sites listing angel, venture capital and other lending institutions.


  Sites that have listings of Angel Investors:
 
vFinance
Garage
    Some Angel Investor Organizations:
 
Active Angels Investors
Angel Health Care Investors
Angels With Attitude
Band Of Angels
CommonAngels
Hub Angels
Launch Pad
Prarie Angels
Walnut Ventures

Angel investors are a special breed of investors. Whereas venture capital firms and funds invest other people's money in new business, angel investors invest their own money. Willing to take greater risks, they are the start-up entrepreneur's best friends. Angels most often assist a company when it may be little more than an entrepreneurs’ dream. Frequently, they offer more than money; serving as coach, mentor, and champion, and often providing guidance from the point of view of one who has experience turning ideas into fortunes.

Introductions to angels can generally be arranged by your CPAs, your lawyers, and investment bankers. Note: you do not need to hire an investment banker for angel money. Since the amount will be small, any fee they would earn would be negligible. Thus, under most circumstances, they will give you a list of angels they know at no cost to you (with the hopes that you will work with them in the future).


  Sites that have listings of Venture Capitals Firms:
 
vFinance
Garage
Finding Money
VCAonline

Venture Capitals are a good choice for companies who are willing to exchange equity in the company in return for money to grow or expand the business. Venture capital firms often want a high rate of return(20%+) and will finance the business with $500,000 to millions. A venture capitalist differs from an angel investor in terms of wanting greater control of company and quicker return an investment.

When meeting with potential investors, you will be pitching your company story to them to get them interested in you. At the same time, you should be interviewing them to get an understanding as to whether or not you want to be interested in them. A quality investor can make invaluable contributions to your company by helping with key hires, putting you in contact with key people in your industry, and introducing you to other investors. This past economic cycle has certainly generated a lot of horror stories of conflicts between entrepreneurs and investors. For sure, most of these relationships started out great once the initial investment was made, but deteriorated when pressures mounted due to every day business issues. Make sure to interview executives at companies that your target firm has invested in. Get their impression on how your firm acted during "the tough times;" did they roll up their sleeves and help, or did they sit back and take shots at the company's management.

There are a lot of quality venture firms out there. Make sure you find the right one for your company.

When pursuing funding from a venture capital firm or strategic investor it very important that you hire a good lawyer to assist you in the negotiation of the term sheet and the final agreement for your funding. The investors are going to have their lawyers working to get specific terms and conditions in the contracts that will allow them to maximize their return on their investment. You need to make sure that these term and conditions offer an adequate return for you and your team. A top notch lawyer can help represent your interests here.


Strategic Investors differ from angel and venture capital investors in that they are less interested in a financial return and more interested in the technology you are developing or the markets you are serving.


  Links to providers of Venture Debt:
 
Sillicon Valley Bank
Lighthouse Capital Partners
Western Technology Investment

Venture debt is essentially a loan with potential equity upside. Here's how it works: Banks and funds extend loans to start-ups, usually for working capital and equipment. In addition to charging 9 to 12 percent on the loan, the lender gets warrants. Warrants permit the lender to get an equity stake in the company at a later date. So if the company goes go public or is acquired, the lender could then exercise the warrants to buy shares at a previously negotiated price and cash them in as part of the sale or IPO.

In most cases, venture debt funds do not insist on collateral or require restrictive convenants.

While there are many firms focusing on traditional venture capital, there are only a few firms that dedicate funds to venture debt. Here are a few worth noting.


 
Small Business Association

The U.S Small Business Administration (SBA) was created to help entrepreneurs fund their new businesses. The SBA provides a variety of different loans for specific situations. To learn more about what the SBA can do for you, click on the link above.