These angel groups can be found in most communities — and on the Internet, with a description of their purpose and objectives. After doing their due diligence, these groups will determine whether or not your business meets their requirements, and if so, will schedule a meeting to gather more data. Investments can range from $50,000 to $500,000 or more. At this stage of the business, angels become very real and serious investors and owners with high expectations looking for solid results.
5. Bank loan/venture capital
In the later stages of a growing business, the now-incorporated business might need a bank loan for various needs, including operating capital and long-term growth. To secure this loan, financial institutions will require several years of financial information on both the business and the entrepreneur. They will want collateral to secure and guarantee a loan. To facilitate the process, engage with the financial institution at the earliest stages of the enterprise — not necessarily for a loan at first, of course, but for a merchant account, credit cards and a checking account. Over time, the bank will become familiar with the company and the entrepreneur will be in a better position to seek additional banking products — including loans — when needed.
For some very fast-growing companies, the organization reaches a point in its life cycle when venture capital funds are required for hyper growth. In this case, the company may need tens of millions of dollars to enter new markets, expand sales or add new products. Once again, these investors, who have money to deploy, conduct their due diligence to ascertain the viability of the enterprise. Their ultimate goal will be to sell your business to garner a financial return for its limited investment partners and the entrepreneur.
If you keep these five means of funding in mind and develop a business plan that demonstrates the value of investing in your company, you'll significantly increase the odds of securing the capital you need, whatever stage of business you are in.
What other suggestions do you have for getting funding? What successes have you had? Failures? I particularly welcome your thoughts on this topic, as I am currently writing about funding as the topic for my upcoming book. You can reach me at @AskAlanEHall, or at my personal website, www.alanehall.com.
Alan E. Hall is a cofounding managing director of Mercato Partners, a regionally focused growth capital investment firm. He founded Grow Utah Ventures, is the founder of MarketStar Corp. and is chairman of the Utah Technology Council.