Finding Private Investors For Business Startup Up

So you’ve decided you want to start a small business and are wondering if finding private investors for business startup up and operational costs would be a good idea for you?

Finding private investors for your small business startup isn’t too difficult. Don’t think that “private investors” are only for those big tech companies and that the deals need to be worth hundreds of thousands of dollars. Not all private investors are like those on the hit TV show Shark Tank or Dragons Den.

In fact, most private investors are looking for a small but stable return on their investment. Thus investing in small businesses is a way to go – simply because they are not investing a lot of money, not taking on “too much of a risk” and they can get involved if necessary.

Not all private investors are business people. They could be your friends, your family or pretty much anybody who has some money to help you start and fund your business. However if you don’t have anybody like that around, finding private investors for your small business can get a bit tricky.

So how do you find private investors for your start up business?

There are a few key steps that can get your small business in front of potential private investors who may be able to look at your business idea and say “Yes, I’d like to invest in you”.

In order to get to that stage there are a few things you must have ready:

1. Have a business plan ready
2. Know how much funding you need
3. Know what you need the funds for
4. Be able to share your business idea/secrets
5. Be ready to give up some equity (if needed)

Having a business plan before you start your search for private investors for your business is sort of a no brainier. Nobody will give you money (especially if you don’t know them or they don’t know you), so a business plan is critical to explain who you are, what your business is all about and a starting point in obtaining private investment money for your small business.

If your business plan is developer professionally it should answer the questions of how much funding you need and what you need it for. This is important because it will help you start asking for that much. The last thing you want to do is approach a private investor and make a deal for not enough or for too much!

It’s important to know how much money you need and what you need the funding for simply because it will prepare you for your business and the private investor search. Certain private investors only fund certain amounts, so when you are finding a private investor for your small business startup, you have to know who to look for.

Keep in mind that when finding a private investor, some investors fund only certain amounts ($), and some only fund certain industries, or businesses in certain locations – be sure to know who funds what, where and how much they have available to make the deal.

A lot of times, startup entrepreneurs are very protective of their business ideas – and they have every right to. However, if you are finding a private investor to join your business and invest their money into you; you will most likely be asked a ton of questions and will have to share all about your business, financials and more. Be sure to be ready for that.

Many private investors when providing funding in the initial stages of the business startup know they won’t get a return on their investment right away – so a lot of private investors will seek for a part of the business (called an equity steak). This means that you and the private investor will negotiate a percentage of the business (or sometimes just percentage of the profits) that will be provided to the investor in return for having them invest with your business.

When finding a private investor for your startup, it’s always recommended to do necessary research into the investor. Just as they would research and familiarize themselves with your business, you should do the same with them or their business. Be sure that you need the funding 100% before you make any deals.

CanadaStartups’ Funding Database provides it’s members with access to hundreds of private investors and government funding agencies – so if you’re having trouble finding private investors for your business, take a look here.