It has been called investment money and venture capital by many, while the professional entrepreneur calls it “seed money.” Think starting your own garden of tomatoes or beans with seeds, not paper pictures of Ben Franklin. Whatever path of “bread crumbs” you choose to follow in searching for your venture capital rainbow, know one thing – that it will be frustrating and time consuming. So in the interim, finalize as best you can your business plan. It will be the most important part of your “seed money” presentation; even more important than your ideas. Oh, sure, you might have an Uncle Fred who has more money than he can spend who will slap you on the back, give you the funds you need, and say: “Here you go, son, and good luck.” Wouldn’t every wishing and hoping entrepreneur like to have that happen, but alas, most times, that’s not the way it works.
90 percent of the time new business startups require venture capital investors to get the project off the ground. And don’t let anyone kid you about the availability of investors. They’re like ants at a lakeside picnic; but most are choosey, and have a due diligence primer handy at all times. So the bottom line is you’ll need money to buy or lease your business space. You’ll also need supplies, equipment and money to pay employees, unless it’s all family. Here are several places to get your venture capital.
#1 – Small institutional lenders including credit unions. Some are eager to help if you’re well-known in the community, and have accounts with them.
#2 – Your personal funds, a HELOC on your home, or family money that offers excellent payback terms. Credit cards are used many times, but not advisable.
#3 – Bootstrapping where you start with a small, affordable investment you can handle, rent or lease space, then use the profits to grow the business. This is a good plan if you don’t require a lot of employees.
#4 – Private person-to-person lenders can be an advantage as long as the terms and conditions are not so egregious that all you do is tread water making loan payments, and never make any headway. Interest rates are often profligate.
All techniques will have limitations but you can also become your own venture capital investor by seeking funds from friends, neighbors, and even form your own small investment company using online advertising.