What Steps are Necessary to Find Financing?

Monday December 29th, 2003

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How to obtain venture capital

Once you’ve determined that your business is a likely candidate for venture financing, the key to finding this financing is through networks. The vast majority of companies that eventually obtain equity do so through networks into the venture capital or angel community. If you do not have networks into these communities, then it is critical to begin research to identify the most likely funding sources for your business.

To begin, you must first identify the venture companies that are financing businesses in your industry sector or stage (seed financing, second or expansion financing), geographic area, etc.

Identify individuals who can assist you in your search for venture companies in your community. These often include lawyers, accountants, and entrepreneurs who have previously financed businesses. These individuals often have formal and informal networks into the venture community.

You must become actively involved in the venture networks in your community. Good sources for networking include:

Venture capital forums. There are a growing number of forums providing training and opportunities to meet venture capitalists in your local communities or on a national basis.

Regional or local venture capital organizations. These are organizations of venture capitalists in your local area. They often have networking events and/or opportunities for entrepreneurs to "pitch" their concept.

Universities with programs on entrepreneurship.

Established angel networks. These are organizations of individual investors who meet regularly to review and discuss investment opportunities.

Professional organizations, such as trade associations of lawyers and accountants .

In addition, you can obtain information on local venture capital companies in your area through trade organizations, such as the National Association of Investment Companies (firms focused on investing in minority markets) www.naichq.org and the National Venture Capital Association (trade organization for venture capitalists) http://www.nvca.org. In addition, the Small Business Administration licenses Small Business Investment Companies (SBICs), which are companies investing in small businesses; information on individual SBICs, including their sector focus, can be found at http://www.sba.gov/gopher/Local-Information/Small-Business-Investment-Companies.