How to Work with an Investor?

While there are dozens of ways to raise capital for a small-to-mid-sized business, most fall under one of two categories: debt capital or venture capital. Debt capital is a traditional loan that the borrower must pay back, while venture capital is capital that is traded in exchange for equity (ownership) in the company. When seeking the later, you’ll need to know how to work with an investor. These “venture capitalists” will only invest in your business if they believe it’s going to be a success.

How to Work with an Investor?

Prepare Your Business Plan

If you haven’t done so already, go ahead and prepare your business plan. This document should provide an in-depth look into the current and future state of your business, explaining how exactly you intend to make a success.

You can check out out previous blog post here for some helpful tips on how to make a business plan.

What to Expect

When working with an investor, you can typically acquire capital more quickly than traditional debt equity, such as a bank-issued small business loan. It’s not uncommon for business owners and entrepreneurs to obtain venture capital in just a few weeks, wheres as debt capital may take months to acquire.

While venture capital takes less time to acquire, you’ll have to really sell your business to the investor. If a venture capital firm doesn’t believe your business will be a success, they probably won’t invest in your business. It’s just that simple. Again, this is why you need a solid business plan before approaching a venture capital firm.

Choosing the Right Investor

It’s important to choose the right investor for your business. Just because a venture capitalist firm offers to invest in your business doesn’t necessarily mean he or she is good fit. Venture capitalists can bring more to the table than just money; some offer skills and expertise — and that’s something you cannot put a price tag on.

Here are some tips on how to choose the right investor for your business:

• Consider the investor’s experience in your business’s niche/industry.
• Check the investor’s past references.
• Ask the investor for case studies of past investments.
• Determine how much equity or “stake” you are willing to sell.

This article brought to you by Intrepid Private Capital�Group � A Global Financial Services Company. For more information on startup and business funding, please visit our website.