Ask the consultant
- March 6, 2011 - 3:22 PM
QWhen trying to raise capital, where is the best place to start?
GRANT SPANIER, THINKCLOUD
ARaising capital for a new business is never easy because of the uncertainty. Investors don't know if the business can survive or if the entrepreneurs have the skills to make the business successful. Most new ventures start out self-financed from personal savings and/or credit cards.
Yes, the latter is risky and expensive, but that is the reality.
The next source of financing is friends and family. These are the people who believe in you and your entrepreneurial dream, and are willing to help you achieve it. Relatives, business associates, and others from your personal network may be willing to invest. Another note of caution; they should realize that this is a risky, long term investment, and they could lose it all. Be clear about the risk, and create a contract that spells out the terms and conditions of their investment. Your relationships with your family and friends are too precious to sacrifice for a few dollars.
Finally, your lawyer or accountant may be able to connect you with so-called angel investors; high net-worth individuals willing to invest in promising start-ups. These investors will expect you to have already invested your own funds to ensure you have some ''skin in the game.'' Finally, successful entrepreneurs say start small, get the concept right and only take outside money when you really need it.
DIRECTOR, SCHULZE SCHOOL
UNIVERSITY OF ST. THOMAS
OPUS COLLEGE OF BUSINESS
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