Chapter 2

Finding the Funding

In This Chapter

  • Making a money plan
  • Using your own money first
  • Looking for an angel this side of heaven
  • Using venture capital
  • Selling stock through an IPO and finding other sources of capital
  • Protecting your business plan

Two common attitudes about startup funds make the search for funds much more difficult. They are

  • The more money I get, the better. I can use as much as I can get.
  • My business plan numbers are just estimates — the investor will tell me what I need.

If you're thinking like this, stop right now. First of all, why seek more investment money than you absolutely need? Every bit of capital invested in your business costs you some equity (ownership) in your company. Besides, having too much money may lead you to make poor decisions because you don't think as carefully as you should about how you spend that money.

Secondly, although it's true that your business plan financials are estimates, they had better be good estimates based on your research. Your investor may discount your estimate of rapid sales growth, but he or she wants to know that you've carefully considered all of your numbers and that they make sense.

In this chapter, you see how to raise capital for your business the smart way — and you start with a plan.

Starting with a Plan

Before you talk to anyone — even your grandmother — about money, have a plan in place, a set of strategies for targeting the right amount of money from the right sources. Here are some guidelines for ...

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