Where to Find Private Investors for Small Start up Businesses

by Yoan on May 12, 2010

find private investors

Entrepreneurs dream of opening their own business but most of the time this dream depends on how much money they may have available. When small business owners have the dream but not the financial backing there are some things they can do to get startup money. Usually, it is not easy, and they have to knock on many doors. Plus the economic situation may not help. But, regardless of the economic conditions, there are some things you can do to get private investors to back your dream business. The first thing you need to have available is a good solid business plan that you can market to potential private investors. If you really want to get backing for your business, a prototype or showing some sales works best. Here are a few options :

1. Partners
– Getting a partner is one of the first things to consider since you are looking at finding private investors to lend you money for your start up business. You should see if you know someone with money available that may want to go into business with you. Or you can also try to find potential partners by joining business clubs and associations. The key is to find someone that thinks like you and is willing to take the calculated risk of investing in your business. The important thing after finding the partner is deciding if the partner will be active or silent in the business dealings and drafting a comprehensive partnership agreement that covers these points.

2. Commercial banking
– You can apply for a private loan or a small business loan (SBL) through your current bank.

3. Venture Capitalists
– These are people who wait for people like you to approach them if you have the right business idea that can make them money if they give you money to invest. Many big companies started with an idea and venture capitalists that took a chance with them, and ended up making the venture capitalists and small business owners extremely wealthy.

4. Lending Clubs
– As the name states, there are clubs that lend money to start up business. They do require that you have a credit score. We did a write up, here on peer to peer lending.

5. Angel Investors
– This particular group is similar to venture capitalists in that they are willing to take a chance and invest their money in your start up business but will require you to keep them involved in the development of the business to ensure their investment pays off.

Finding the money to start your small business will probably be tough, but making your dream a reality, working for yourself and making a lot money with your own idea, determination and hard work is worth all the effort you may have to invest in the beginning.

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