Like say you’re starting a new business and you want investors to help fund the start up, how does that work?
In: 1
One of the hardest part is finding the potential investors. So-called “angel investors” and venture capital firms are generally involved for things like high-tech startups. You usually need to make contact with someone like an investment banker who knows all the players in that space to even get you in to see them.
For small businesses, your local banker might be who you need. Either to give you a small business loan or to help you find potential investors.
Or perhaps you know some rich people. Or a bunch of semi-rich people.
You will need to be able to convince the banker (or whoever) that you are worth the time. You will need to show them that you have a business plan and a viable strategy. Not just an idea, but actual numbers and the assumptions that went into coming up with those numbers.
Then you go through that process again with the potential investors. Possibly many times, as not everyone is likely to want to invest in your business. You need to have the ability to concisely convince people that your business will work, and hopefully make money for your investor(s).
Once you have investors, you get a contract drawn up with the terms. Sometimes a much shorter “term sheet” is done as a precursor to this, to outline what the terms will be in the final contract. The investor, of course, wants to know when they will be paid back and how much. Or they want to know what percentage of the business they will own and what limits exist to their ability to decide how it operates.
Latest Answers