There are different kinds of investors and they do business in different ways. Here you find the main actors in the market.
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.
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.
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 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.
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.
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.
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.
A year from now you will wish you had started today.