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Investors and Others

If you have an attractive investment for investors you should definitely try to approach them.

There are different kinds of investors and they do business in different ways. Here you find the main actors in the market.

Venture Capitalist – VCs

Venture Capitalists are professional investors looking for a high rate of return by investing in high-growth business ventures. Extremely few new businesses have a profile that will interest venture capitalists – maybe only 1 out of 10.000.

What attract the VCs?

VCs want to invest in companies that can grow very fast. This means that your business needs to approach a huge market, have a managing team that can scale up the business fast, and a willingness to take risks in order to gain even more momentum in the market.

As a general rule, VCs don’t like reasonable profit margins. They are exclusively interested in outrageous margins

Make one - sell millions
Venture capital is all about investing a - for them - small amount of money to create a business with massive scale and huge multiples. They like e.g. to invest tens of millions to build software that then can be duplicated or served up for virtually nothing extra per-person with a total market size of billions. The best example is Microsoft Windows – it is developed and is now sold to millions of PC users all over the world.

Exit strategy
At the time the VC enter your business they plan to leave again. Their only goal is to earn 10 times their investment - to put in 20 million and leave with 200. Many of the businesses that have been VC funded will be sold to bigger corporations as soon as their product has proven it works – or might work one day.

Awesome
If you have the right type of business, venture capital is awesome. It’s an instant infusion of cash, connections, experience and it gives you credibility. It accelerates everything.
Go to Google and search “Venture Capital” and VC companies will show up.

Angel Investors

Angel Investors are mild versions of VCs. Angel Investors are high net worth individuals who invest in businesses on a private basis. It is their own personal money they invest in start-ups and of cause they also want to earn money on their risky investment.

Angel Investors often invest in businesses they have personal knowledge about and the amount invested is much smaller than what VCs can come up with.

Angel Investors cannot be found in public databases. Somebody who knows somebody might introduce your project to an Angel Investor. Accountancy companies sometimes know Angel Investors.

Successful startups did it all on their own

According to studies from Duke University that researched the backgrounds of 549 entrepreneurs whose companies had made it past the begging-for-seed-money stage and were generating real revenue only 9% had raised any angel capital.

For the vast majority - 70% - of successful entrepreneurs starting their first companies, it was from personal savings. A much smaller number raised money from business partners, bank loans, friends and family, and other sources.

Public funding schemes

All over the world different governments like to support entrepreneurs one way or the other. They can, in their effort to promote entrepreneurship, set up financing schemes. The schemes can promote rural development, high tech industry, biotech, the service sector or something different. Contact your national, provincial or local government. They should know if there are any public funding schemes in your area.

Suppliers giving credits

Maybe you are in a position where you can press your suppliers to give you 3 -5 months credit? If you are, then they could help you finance your start.
Say you know a sports shoe manufacture. He "lends" you 500 pairs of shoes for 4 month. You sell them all. You pay your supplier the money you owe him and you keep the profit.

All kinds of credit will help you get started.

- Go to Financing Business Start

Business Plan Budgets
Operating Budget
Establishing Budget
Example of an Operating Budget
Cash Flow Budget - inspiring template to download
Contribution Margin - Example
Calculate turnover and necessary sales
Personal Source of Financing
Be sure to have Sufficient Cash
Financing Business Start
Sourcing from Banks
Investors and Others
Funding Capital
Organising the Company
Your Product / Service
Financing Start-up
Sales and Marketing
The Person Behind
Entrepreneurship Education