How To Find Investors?

Hello.

In a few words, here is where I am.

I started building websites more than a decade ago. Worked for a company, made good money. I then created my own company, started to build websites of my own, made profits through advertising.

For the last couple of years, I have been working on a more ambitous, larger-scale project when I found the time. I feel that now this project is ready to take off.

But here comes the issue. During all these years in business, I didn’t have to worry about finding money to start my projects. I was just building websites, promoting them myself, and it worked surprisingly well. For this new, more ambitous project, I’m going to have to find investors. And I have no clue whatsoever how to talk to them: should they invest in the project? In my company? Buy shares? If yes, how does it work? How do they make money out of what I’m going to do?

I could ask many more questions of that kind. So please consider I’m a newbie in this area, and don’t spare me any obvious, verging on for-the-dummies, advice. Good books and online ressources are also welcome.

Thanks in advance.

t.

I think that unless you have a redhot product and tons of experience, you should expect to sell of much more than 10-205 of your company in order to get early rounds of investment.

First of all it all depends on the type of projected you have started. Iy you can show people that the real opportunity is there presently or in near future, then people will definitely invest in your project. Money is not a problem for people who are searching for like oppertunity.
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Try Googling for “angels startup investors”.

I thnk that the majority of Angels are only interested in investing hundreds of thousand dollars. If this is your case then there is a vast amount of information on the internet.

I would try locally first such as your own bank will be well worth a visit even for tips where to start looking. Also Goverment Loans and Business Clubs

I have been involved for the past three years on a similar scheme that requires investment. It is eventually getting towards having a product to demonstrate and maybe also to sell in a couple of months. It has not been easy especially since the past couple of recession years.

Stick at it and I hope you achieve your goals.

.

The question that people will be asking is “What are we investing in?”

A planned out muti million dollar investment run by an experienced person with a track record of profitable successes?

Or some guy who says he is building a website?

People invest in oil wells, gold mines, factories with proven successes and millions of dollars to run on. Usually not a non extant website with non extant profit.

Most website investors got a bad taste from the dot com crash 10 years ago. Just my opinion on it.

Thanks for your replies. But you’re not answering my questions.

In the process of finding investors, I am more interested in discussing how they’ll make money than how much they’ll give me.

My angle, in this thread, really isn’t about getting money to start a project, it’s about how investors will get money once they have made the investment. If I were an investor, that’s what I would like to hear.

So, what are the ways you know about to pay your investors back?

Try Googling for “angels startup investor returns”.

Give us some idea of your background. What have you done in the past? This might help in pointing you in the right direction. Also, what is your new big idea? Why are you going to make money from it and what size of investment are you after?

I’m really sorry, my thread title has misguided you.

Let’s assume, for the sake of the argument, that I have a great idea, that I know people who think it’s a great idea, and that I know they will put money in it. Now, still for the sake of argument, let’s assume I am about to attend a meeting with my investors, and I don’t want to look stupid when the money talk comes. I want to be able able to have a decent conversation with them on the following topics:

-buying shares of my company (how do I create shares, how much? at what price?)
-giving them feedback (monthly, quarterly, yearly? through a letter, an email, face-to-face conversation)
-paying them their profits (monthly? quarterly?)

How do you guys behave in front of investors when it comes to such topics?

Thanks :slight_smile:

Typically an investor will want to own a percentage of the company, usually in the form of stock. That’s actually the main purpose of stock issuance. In a perfect world, the investor would make huge returns on the dividends of those stocks, but that rarely happens.

Instead, the investor may want a contract that gives them some profit sharing or other revenue once the company has reached a particular point of profitability.

Many times the investors will want to see an exit plan, where the company will be sold off to a large company once it’s established. This brings a wave of money to the main stockholders, which would be the investors. This is probably the most common scenario that pro investors are looking for.

There are all sorts of custom deals in between, and as you deal with smaller amounts of money you can get more creative.

You really need to build a reputation and a track record to find an investor that wants to send some money your way, but there are always strings attached, and rarely would you just get a fat check that is yours to upgrade your lifestyle.

The best advice I can give is to position yourself well. Many of the investor types are going to be in big cities or members of organizations. You have to think about how you can get yourself face to face with some of these people, even if informal, and make some friends. That is generally how most people match up with investors for the first time.

Try to cut the best deal with angel investors. I’ve a few experiences where they are not so angelic. Give a great presentation and it’ll woo them to your favor. Preparation is everything.

Thanks for the replies.

How would one issue stocks? :slight_smile:

You need a lawyer to incorporate your business and then issue shares to investors.

One other option, if you’re willing to relocate, is to join an incubator program like Y! Combinator or TechStars. There’s a couple dozen of these around the world in major cities. Typically they provide a small amount of funding and office space/admin support in exchange for 5-10% of your company. They can also provide introductions to other investors, etc. once you need more money.

Investors generally give you money in exchange for equity in your company. This means depending on your evaluation you would be able to sell 10-20% of your company for x amount of money to an Angel Investor.

Whether an Angel would be interested in your company depends on a variety of factors. One of which is how much your looking to raise. If you are only looking to raise 50k, They may not be interested, as they are looking for investments with the possibility of large returns, which they more than likely won’t get at such a small amount.

For raising smaller amounts of money, business loans and grants are an option worth exploring.

Also, I would encourage you to check out Open Angel Forum. www.openangelforum.com

Keep in mind that when looking for Angel Investors you need to choose them wisely. Check their track record, and ensure it someone you can work with for a number of years, as they will be on your Board and working with someone you can’t stand for the next 5+ years isn’t exactly an ideal situation to put yourself in.

Good luck! :slight_smile:

just see how google adsense invest on your website by displaying there website they knows they will get profit from your website.

you need to keep your media kit ready for revenue and getting investors.

If I had to pick just one book I’d get “Founders at Work” Stories of Startups’ Early Days
Easy to read and lots of good information from those who have BenDerDunDat. Every story is unique and so will yours be.

I don’t think there is a cookie cutter solution out there.

http://ycombinator.com/ as previously mentioned is a good place to look for intensive entrepreneurial chatter.

Good luck, hopefully you’ll enjoy the journey and someday will return to share your story.

In terms of how you apportion part of your company to an investor it is really easy.

The biggest thing is you must have a company and it must be a corporation. This means you basically must just pay your $1000-1500 to an incorporation lawyer to make “My company” to “My Company Inc.”.

Every incorporation has a ‘share structure’. Nearly all small companies are owned by 1 person or two partners, so this means “Jim owns 100% of the shares of My Company Inc” or “Jim/Bob each own 50% of My Company Inc.”. This is absolutely no different than, say, Microsoft who has shareholders (i.e. Bill Gates has a 10% share in Microsoft). Who owns what is all outlined in the company’s “constitution” aka, “Articles of Incorporation” (this is what you’re paying your $1000-1500 to a lawyer for, to design this document).

If you want to sell part of your company, you simply talk to your lawyer and they can easily assign a certain portion of your company to another person.

There’s no realistic way to do any of the above without a lawyer. Any lawyer specializing in incorporating companies can do exactly what you want to do and, in legal terms, it’s relatively cheap. It’s also extremely common.

There are so many unfounded statements in your post that I don’t know where to begin except to say, beware of the information in the above post!

I’m a Finance major by background and have run small companies for many years. Obviously I have ‘dumbed’ down my advice so the OP, who is obviously relatively new to all of this, can have the confidence to approach this topic with a lawyer.

Could I have given more detailed and technical advice which would have simply intimidated the OP and possibly other viewers of this thread? Absolutely. But what would be the point? An internet message board isn’t the place for making concrete decisions on such topics- a lawyer’s office is.

Your wrote:

“That’s actually the main purpose of stock issuance. In a perfect world, the investor would make huge returns on the dividends of those stocks, but that rarely happens.” .

Stocks? Dividends? That sounds like something reserved only for NASDAQ companies. A lot of people are going to be intimidated by that and never entertain the idea of getting investors again.

Lets face it, most people who get investors for the first time are likely going to get it from friends and family. They’ll likely want a small percentage of the company, something that can arranged very easily with a lawyer. There’s no need for all this confusing talk of stocks, dividends, and profit sharing especially when someone is quite obviously just looking to get a general idea meeting investor’s demands.