How to Find Investors for Your Startup

How to Find Investors for Your Startup

Simply put, this may not be the best time to start a new business.  The mortgage lending crisis led to a lot of changes in the banking industry, and it has unfortunately resulted in a lot less loans, even for qualified businesses.  But there are other ways to secure the capital you need to launch your enterprise and become the success you know you can be.  In fact, you might find that some of the opportunities out there are even better suited to the needs of your particular operation.  So before you throw up your hands in despair at the woeful lack of lenders willing to offer you money, perhaps you should explore a few other avenues of investment.

Bank Loan

Okay, I know I just said that you should look at other options, but the truth is, this may still be your best bet for startup capital.  You simply need to go about securing the money in the right way (which means doing your research).  You need to find out which banks are likely to approve a loan for your particular type of business (based on their track record) and then figure out the right person within the organization to help you get the loan you need (someone with experience in your industry or type of loan).  This will greatly improve your chances of getting approved.

Personal Loan

There are both positive and negative aspects to asking friends and family members to invest in your business.  On the one hand, they are already invested emotionally in your success, so it only makes sense that they would agree to help you financially.  And they will likely be a bit more lenient with both interest and payment schedules.  But there is also going to be more pressure on you to succeed so that you can pay these people back (or else you risk ruining your personal relationships along with your business).

Self-directed IRA

This is just a safer way for those you know and love to offer you money for your startup.  Basically, they’ll invest a portion of their retirement fund with your business, with the addendum that they take a percentage of any business earnings (like dividends) in addition to repayment of principle.  Ideally, they won’t need the money for years to come, so you’ll have plenty of time to pay it back, and they’ll end up with more than they put in.

Angel Investors

If you’re in need of mentorship in addition to funding, then angel investors could be a great option.  These people have money to invest in new businesses and they often have years of industry experience to help them choose the right businesses and entrepreneurs (those they deem a good investment) as well as advise them and steer them towards success.

Partners.  Having to deal with input from a business partner may not be your first idea, but beggars can’t be choosers.  If you need the money and there’s no other way to get it, then consider signing on someone who not only has the cash on hand, but also believes in the viability of your business plan.

Sarah Danielson writes for Purchase Order Financing you can grow your business and pave the way for more.

 

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