Expert Answers to Biz Questions
Listen in! Pick up some expert advice to a reader's question that we selected from CyberSchmooz.
The Biz Question
It's been 4 weeks since I had an excellent idea for an Internet start-up. Since then, it actually evolved into multiple ideas and finally I decided to create a new, innovative Internet Portal. I wrote a part of the Business Plan and hired 9 programmers. Some parts of the portal will be launched within 2 months as independent web sites, then either sold or put back together as a portal, once all the pieces are ready.
Now I face the biggest problem: How do I find a partner or two, who would be able to raise Venture Capital for further activities ???
I basically need a partner/CEO or CFO, who would be excited about the idea(s) and have access to Venture Capital. Preferably someone who already worked for another Internet start-up.
I still have a full-time job and live far away from Silicon Valley or any other tech city in the U.S. I simply can't find anyone around here with any kind of Internet experience.
Can anyone help ?
Answer from our Guest Expert Lillyvette Montalvo
Let's start off with a few suggestions and thoughts and then dive right into the main course of answering your question.
Get All Your Ducks in a Row
Before doing anything else, you're gonna want to have all of the proper ingredients that'll make your biz dish appealing to the usual investor. First on the list, you say you only have "part of a business plan." For the record, you won't be able to obtain any type of financing -- especially from an outside investor -- if you don't have a complete business plan, including one with an executive summary. A comprehensive business plan is the most vital ingredient to your search for funds. (Small Business Development Centers, which are located on local university and college campuses nationwide, offer free advice on writing and completing a business plan. Take advantage of them if you can!)
Financing Food for Thought
When you say you're looking for a venture capitalist/investor to be a part of your biz...remember, they will be! When you add more chefs to any enterprise -- even if they're the ones with the money to bring your biz to a boil -- it's no longer only your business. You'll end up providing a percentage of your business to investors in exchange for their services: providing the dough.
Another financing consideration when searching for a venture capitalist is to ask yourself some key questions. Such as:
The bottom line is that VC money is very difficult to obtain. In fact, it's estimated that out of every 1,000 deals that cross a VC's desk, only a maximum of three of those actually close. Unless your product is extremely unique and you plan on taking your company public, a VC won't have much interest in your company. As hard as that is to swallow sometimes, unfortunately, it's the brutal truth.
There's More Than One Way to Cook Up Your Financing Catch!
Take heart, tho! You do have a few other financial options you may want to explore!
First, visit your local SBA office and apply for a biz loan through them. If you have what they're looking for, they may be able to assist you in obtaining the start-up money you need to get things cooking.
Second, since you've said you have a full-time job, is it possible for you to use credit cards? This available "line of credit" can assist you until you start making money from your biz. At that point, you won't need to rely on the cards anymore. I strongly suggest, however, you be very cautious of using your credit cards...only use them if you can pay them back quickly. (Remember: I've made this suggestion because you've said you have a full-time job, so you have a regular check coming in to cover this added expense).
You mentioned you've hired nine programmers. Do any of your programmers have any interest in becoming a part of the business? Would they want to invest in the company to also be an integral part of it? For example, as a shareholder? You may have partners right under your nose -- persons you haven't come right out and asked if they'd like to invest in their "future."
Lastly, there's a book that may assist you in making the transition from employee to entrepreneur: Thinking Like An Entrepreneur by Peter Hupalo. This may be a good start. He briefly covers financing issues and you may be able to expand some of your horizons with this book.
Have a biz question of your own? Go post it in CyberSchmooz
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DISCLAIMER: We hope whatever you find on this site is helpful, but be cautioned that it may not apply to your own situation, or be totally current at any given time. Idea Cafe Inc. and all of its current and past experts, sponsors, advertisers, agents, contractors and advisors disclaim all warranties with regard to anything found anywhere on this family of websites, quoted from, or sent from Idea Cafe. and its related sites, publications and companies. We also take no responsibility for comments published by others on these pages.
TRADEMARKS: The following are Registered Trademarks or Servicemarks of DevStart, Inc.: Idea Cafe®, Online Coffee Break®, The Small Business Gathering Place®, Take out Info®, Biz Bar & Grill®, Complaint-O-Meter®, A Fun Approach to Serious Business, CyberSchmooz, and BizCafe.