Some of the hardest and most challenging work a small business owner must face revolves around the process of getting financing - for starting-up, growth and profitable expansion. Here in Seattle the Northwest Entrepreneur Network recently hosted its early stage investment forum for emerging businesses looking for money. It proved to be a great "connector" opportunity for those looking for funds and those looking to invest in the best new ideas.
Studies show that most entrepreneurs bootstrap their initial business start-up efforts with an investment averaging $70K, employing a wide range of investment vehicles. For starters, many small business owners dig into personal savings, home equity loans and even credit cards (look at the Google founders). They stretch themselves far, and often, and can put their own credit at risk.
Another route for funding is via "friends and family" - those people who know you well, wish you well, have some discretionary monies for supporting people/business areas they care about and have some flexibility about immediate return. Most often they won't require an in-depth, multi-year business plan, just a solid articulation of your commitment, business opportunity, customer target, product-service value proposition, marketing-sales approach, revenue expectations and capital required. But while this audience may have a more open mind during the investment process, it is a good idea to formalize any financial agreement with a sold legal contract.
Another vehicle is a bank. But while a bank may seem like a good avenue for monies, it's actually really hard route. Be prepared to show revenues they can "bank" on. Banks also need tangible assets as collateral, which a small business owner would need to feel comfortable risking.
One of the vehicles that the NWEN investment forum promotes is your geographic region's angel community. There are a number of angel organizations in the Pacific Northwest such as the Tacoma Angel Network, Alliance of Angels, the Seraph Capital Form and the Puget Sound Venture Club. To be accepted to present to these groups, a small business needs to have a completely detailed business plan and Power Point presentation, along with a pitch letter. All these materials need to be submitted to these organizations' selection steering committees, which then select which companies have the opportunity of presenting.
If you are fortunate enough to be chosen to present, I'd recommend investing in some presentation coaching as well as presentation graphics design. You'll only have a few minutes to make the best impression for your business, and you'll want to maximize the opportunity. Be prepared to shorten your presentation to as little as 10 minutes, and be sure you have completed a thorough question and answer session with a mock audience so you are confident answering all possible questions.
It's important to remember that an angel audience is most interested in ROI, and that's the point an entrepreneur needs to drill home.
Shivonne Byrne, Innuity CMO
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