Where can I get start up funds, and what is the normal amount of equity I have to give up?

Question

I have a really awesome and unique business concept. I have the business plan almost completed. I need 185,000 less my 35,000 so 150,000. I recently applied for an SBA loan but want to have other options ready if it falls through.

What is the best way to raise this kind of capital?
If I get angel or private investor what percent of equity or (profit) would I be expected to give up and for how long.
Finally, should I be concerned about showing people my business plan?

Answer 1

CNN Money http://money.cnn.com/2006/02/28/magazines/business2/angelinvestor/index.htm has a very good article on angel investors, what they typically look for, what kind of investments they support, etc.

On the web, you can find them at the following sites.

Angel Capital Association http://www.angelcapitalassociation.org
Angel's Forum http://www.angelsforum.com
Band of Angels http://www.bandangels.com
Common Angels http://www.commonangels.com
Keiretsu Forum http://www.k4forum.com
Launchpad Venture Group http://www.launchpadventuregroup.com
New World Angels http://www.newworldangels.com
New York Angels http://www.newyorkangels.com
Prairie Angels http://www.prairieangels.org (charges $125 to submit idea)
Robin Hood Ventures http://www.robinhoodventures.com (charges $250)
vFinance Directory of Angel Investors: http://www.vfinance.com

Answer 2

To get started, I suggest contacting the Small Business Administration Financing Page (SBA) – links below. Entrepreneur also offers a great site dedicated to money & finance – see below.

Research, research, research – this cannot be stressed enough. Read as much as you can. Here are some book titles that are relevant:

* Free Money for Small Businesses and Entrepreneurs by Laurie Blum
* Finding Money: The Small Business Guide to Financing (Small Business Series) by Kate Lister, Tom Harnish
* Financing Your Business Dreams With Other People's Money: How and Where to Find Money for Start-Up and Growing Businesses by Harold R. Lacy
* No Cash No Fear: Entrepreneurial Secrets to Starting Any Business with No Money by Terry Allen
* Starting on a Shoestring: Building a Business Without a Bankroll by Arnold S. Goldstein

There are plenty of free informational resources out there. Check the source box for links to articles.

Hope that helps! I wish you much success & happiness in all your ventures!

Answer 3

I have been learning about something called "hard money" loans. These are private individuals with cash that they interesting in putting on the street for big profits. You you'll have to pay points up front and the loans typically are payable in less than 5 years. The only down fall is that these loans are usually for real estate investment. So if you default they can just foreclose on the property. That doesn't mean that you can't still get one for whatever you are trying to do. Do a google search on "hard money loans".

Answer 4

First off, PRIOR to giving out your business plan, make sure they sign a letter of confidentiality. You want to ensure they don't take your idea or platform to someone else, masking it as their own.

Second, there are many good books and websites on this subject.

http://www.fundingpost.com/index.asp

As for how much equity you must give up? It depends on what sector your company is in, and the risk involved in the deal. The higher the risk, the more equity you may have to give up. There are also ways to raise capital without giving up large blocks of equity.

Any more help I can give, please let me know.

Answer 5

Try prosper.com.