investment bank logoinvestment bank logoinvestment bank logoinvestment bank logo
  • ADVISORY
    • BUY SIDE M&A
    • SELL SIDE M&A
    • CAPITAL RAISE
    • BUSINESS VALUATIONS
  • DEALS
  • ABOUT
  • CONTACT

Steps for Finding Private Investors for Your New Business

Successfully applying for a small business loan is one way to get capital for launching and operating your new business. But you can also raise capital through outside investors. Understanding how to identify potential investors and convincing them to back your business can seem challenging. Here are four steps to expect on your way to the right investor.

1. Understand the types of private investing. It helps to begin by learning a few terms. “Private equity” is used to describe a number of investment types, whether by private individuals or privately owned institutions, such as private equity firms. Private equity might be used for financing a project, business startups, purchasing a business, or similar investments.

Venture capitalists are private investors who are looking for high-growth from a new startup. These are often professional investors who focus on opportunities that yield potentially high returns. They often concentrate on an industry, region or stage of development. Venture capitalists sometimes serve in advisory roles as part of their arrangements with the business owner.

Angel investors, on the other hand, are generally  individuals of high net worth, often former entrepreneurs, who are looking for opportunities for private investment in startup companies. They are often a source of wisdom as well as capital. Their investments usually come in smaller amounts than what is typical of venture capitalists.

2. Identify Potential Investors.  Professional networking is the best way to identify potential private investors for your business. Whether your city’s chamber of commerce or another business organization, start your search there. Talk to other small business owners as well as potential investors. Asking for advice from a seasoned expert can lead to future investment opportunities.

In addition, there are national, and often local, investor and venture capital groups. Your state economic development agency or small business association may also be able to put you in touch with local investors.

3. State your case.  This is the point where you need to effectively sell your business and its potential, keeping in mind the investor’s criteria and self-interest.

Research your potential investors. Understand their investment history and what they hope to get out of the investment. Understand what is motivating investors and build your sales pitch accordingly. Be prepared to answer questions about every aspect of your business, including plans for long-term growth.

Your business plan will play a crucial role in the success of your pitch. Ensure your assumptions are realistic and valid. Investors will be most interested in how you plan to generate a profit and how that equates to a healthy return for them. Know your business plan completely so you can quickly and effectively respond to questions rather than having to thumb through your plan to formulate an answer.

4. Await next steps. Once you have made your pitch and provided your complete business plan, your only job is to wait and answer any additional questions. If further interested, expect a venture fund to perform due diligence as a next step, which may lead to drawing up terms and conditions for funding the investment.

  • Author
  • Recent Posts
Nate Nead
Nate Nead
Nate Nead is a licensed investment banker and Principal at Deal Capital Partners, LLC, a middle-marketing M&A and capital advisory firm. Nate works with corporate clients looking to acquire, sell, divest or raise growth capital from qualified buyers and institutional investors. He holds Series 79, 82 & 63 FINRA licenses and has facilitated numerous successful engagements across various verticals. Four Points Capital Partners, LLC a member of FINRA and SIPC. Nate resides in Seattle, Washington. Check the background of this Broker-Dealer and its registered investment professionals on FINRA's BrokerCheck.
Nate Nead
Latest posts by Nate Nead (see all)
  • Covid-19 Impact on US Private Capital Raising Activity in 2020 - May 27, 2021
  • Healthcare 2021: Trends, M&A & Valuations - May 19, 2021
  • 2021 Outlook on Media & Telecom M&A Transactions - May 12, 2021
Nate Nead
Nate Nead
Nate Nead is a licensed investment banker and Principal at Deal Capital Partners, LLC, a middle-marketing M&A and capital advisory firm. Nate works with corporate clients looking to acquire, sell, divest or raise growth capital from qualified buyers and institutional investors. He holds Series 79, 82 & 63 FINRA licenses and has facilitated numerous successful engagements across various verticals. Four Points Capital Partners, LLC a member of FINRA and SIPC. Nate resides in Seattle, Washington. Check the background of this investment professional on FINRA's BrokerCheck.

Related posts

May 27, 2021

Covid-19 Impact on US Private Capital Raising Activity in 2020


Read more
May 19, 2021

Healthcare 2021: Trends, M&A & Valuations


Read more
May 12, 2021

2021 Outlook on Media & Telecom M&A Transactions


Read more

Get in touch

[]
1
Step 1

keyboard_arrow_leftPrevious
Nextkeyboard_arrow_right


investment banking Logo

Services

  • M&A Advisory
  • Sell-Side M&A
  • Buy-Side M&A
  • Raise Capital

About

  • About Us
  • Our Deals
  • M&A Blog
  • Contact Us

© Copyright Deal Capital Partners, LLC.

Privacy Policy | Terms of Service | Listing Agreement

This does not constitute an offer to sell or a solicitation of an offer to buy any securities and may not be used or relied upon in connection with any offer or sale of securities. An offer or solicitation can be made only through the delivery of a final private placement offering memorandum and subscription agreement, and will be subject to the terms and conditions and risks delivered in such documents.

M&A advisory services offered through MergersandAcquisitions.net. Securities transactions are conducted through Four Points Capital Partners, LLC (4 Points), a member of FINRA and SIPC. Deal Capital Partners, LLC and 4 Points are not affiliated. Check the background of this Broker-Dealer and its registered investment professionals on FINRA's BrokerCheck.

An Invest.net Partner