Need a Private Investor? Here Is How to Get One

Getting a private investor to place capital with your business is difficult. This is almost always due to the fact that you are going to need to show that your business will be economically viable and expandable. This is one of the most important aspects to focus on when you are working with a private investor. You are going to need to show exactly how you intend to expand the business aggressively during its first five years of operation. One of the things that is most important to an angel investor or outside funding source is that you can produce a substantial return on investment on a year to year basis. Smaller private investors are seeking to achieve a compounded annual return of 20% per year on their money. As such, you may have some level of difficultly when you are working with an outside funding source if you intend to start a more local business.


One of the most important things that you are going to need when you are working with an outside funding source is to have a well developed business plan. This is important because a private funding source is going to make a vast majority of their decision based on the strength of your business plan. Within your business plan you are also going to need to showcase exactly how you intend to use the funds that are to be provided by this funding source. This is one of the most important sections of the business plan as it will showcase what portion of the capital will be used for tangible asset purposes. One of the ways that you can sway an investment decision in your favor is to show that you will purchase a number of hard assets. In the event that your business does not go as planned, these assets can be sold so that an investment can be recouped.


In a final regard, you should start your search for a private investor by working with local business people as well as your chamber of commerce. This is one of best ways, and most cost effective methods, of obtaining the capital that you need for your small business. One of the things that you can also do is approach your local Small Business Administration. Although the SBA does not provide equity investments into small businesses, they usually have a number of contacts that they can put you in touch with as you progress through the capital raising process. As always, you should have professional assistance as you go through this process as they are a myriad of laws and regulations that you must comply with as it relates to these matters.

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