Raise Capital?

Question

What would be the best way to raise capital outside of a bank environment? I have some capital from friends, but how do I attrack say private investors or something to that arangement?

Answer 1

There is no such thing as "raising capital". You need to be more specific. Do you want to raise debt or equity? For what purpose (working capital, long-lived assets, something else)? If debt, what is your preferred maturity and what kind of interest rate can you afford? If equity, what is the exit strategy for equity investors: IPO, sell-out, leveraged buyout, none (dividends forever)?

When you understand what you need, talk to Small Business Investment Companies operating in your area (you can get a list of them from your local SBA office). Usually, they specialize (some only invest in debt instruments, others, only in equity, yet others do both). If you are looking for equity and your exit strategy is IPO or sell-out, consider talking to venture capitalists. If you are indifferent between debt and equity and your exit strategy is leveraged buyout, talk to mezzanine funds.