Venture Capital Pros

Outside equity investors in your small business purchase are hard to find, but a few do exist.

If it’s an individual ‘angel’ that you want, you will have to explain to this investor why he/she should take the risk when there are so many other, safer ways to invest money. In most cases, angels have strong relationships with those they sponsor. Look for wealthy old-timers you already know. Or, look for specialists who know your industry.

On the institutional side, professional venture capital investment groups nearly always want majority control in growing companies. In most cases, they are seeking only high-growth companies with sales over $5 million. They are looking to invest in companies that can offer the hope of 20-40% annual rate of return on their investment!

Both angels and venture capitalists are mostly still equity investors, not lenders. There are some changes on the horizon in private placement financing, but these will be slow in coming.

Mix and match these seven sources of financing. Plan well and be aggressive about your money search. Almost all businesses get funding from more than one source. There is every reason to seek out funds from all seven!

Source : Glen Cooper, CBA, is a Certified Business Appraiser and is President of Maine Business Brokers

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