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I have an idea, but no funding

How to get funding to start a business

     
9:35 am on Mar 12, 2006 (gmt 0)

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Say i have an idea, that i know will be profitable, and is a fun and unique idea.. The problem is i dont know where to start. How do people go about egtting funding for their buissness ideas?

Is there somewhere i can shop my idea to a bunch of venture capitalists and see who bites? Im convinced this idea is unique and the buissness model i have for it will be profitable, and best of all it'll be a really fun site that im sure a lot of people will want to use.

12:06 pm on Mar 13, 2006 (gmt 0)

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Hi,

The usual process is for you to approach 'angel investors' (individuals who invest their own money). They then help you get to the stage where you're ready for venture capital investment.

Google for 'business angel network' to find your local group of angels.

You go along to them, you present your pitch, and if they're interested, they invest.

To see if your idea is suitable for this type of investment, I'd recommend you read the book "the new business road test" by john mullins.

hth, a.

12:23 pm on Mar 13, 2006 (gmt 0)

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Have a well thought out written business plan, or see someone who can help with a business plan. Then go to a bank and ask for a business loan. With a good business plan most banks are more then willing to give a loan, unless you have a really really bad credit history.
12:37 pm on Mar 13, 2006 (gmt 0)

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You need to start the business planning process.

Investors want to see evidence that you have evidence of marketability and that you have thought out how you will go about making the business work.

Bankers may lend you money if you have security. But with no business history and no solid plan they will be counting only on the security. You may end up simply losing your money plus interest.

The best all around business plan book I have seen is "The Successful Business Plan" by Rhonda Abrams. For real beginners the "Business Plans Kit for Dummies" has some advantages.

Good luck

4:19 pm on Mar 24, 2006 (gmt 0)

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Wow...this is an ENORMOUS question. Firstly, I reccomend the above books as well...and also would engourage you to read about 3-5 more books on the same topic. There are millions...ask around for some help on better one's. Also, in order to realize the reality of your search for venture capitol, read the book "The art of the start" by Guy Kawasaki. He tells it pretty straight.

Realitically most of us don't get funded by some VC company that we just randomly handed in a few sheets of paper outlining how our business will be worth 50 million by year three. Especially not in the state of VC right now. Maybe during dot com boom? And that was unhealthy. It generally happens with personal funding or friends. I.E. "Angels" as they are so called.

What you do need to be thinking about more than anything in my opinion is, "Is there a way that I could offer similar service, or any service, in which I can begin to fund this project piece by piece myself" In doing this you get past the point of "just an idea" and onto the point of building a working machine. Without a working machine you really don't have much of a chance at scoring some VC help. You need a team, you need a working testable product, you need proof of market, proof of market growth and proof that your "idea" is understood by the rest of the world. Not just a "feeling". The only people that will take a risk on an idea is like I said earlier, friends. And in all likely hood they aren't taking the risk on the idea, they are taking the risk on the fact that they think you are a good guy...which also happens to be a small part of the VC game.

Like I said, major question with infinite answers...check out some books, can't hurt.

Good luck!

4:45 pm on Mar 24, 2006 (gmt 0)

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Before jumping into bed with angels, look for money closer to home.

Tap into your savings. Mortgage the house and kids. (Just kidding!) Talk to friends & family. Look into an SBA loan. (Remember- loans stay with you until you pay them off; investors usually hang around forever, or until they kick you out.)

But before you start, you DEFINITELY need a business plan. (Even though you are thouroughly convinced this venture will be profitable, EVERY new business owner is just as convinced as you are that his idea will make money and not be like most businesses that fail within 3 years.) Formulating a business plan will help you solidify your idea, work out kinks you hadn't thought about before, create a road map to follow to make your business successful, and help you explain to ther in clear words what your business is about and how you will make money for your potential investors.

5:06 pm on Mar 24, 2006 (gmt 0)

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This is kind of off to the side of "how to get funding," but is there any way you can fund developing a "proof of concept" or demo of this idea yourself? If you have the technical skills, can you build something that would at least give investors a visual of how it would work, or do you have a friend that can design you a really great looking sort of shell site that maybe isn't functional, but has links between the pages so that people can get an idea of it?

I know when companies I've worked for in the past looked for funding, we always had a demo, or at least, a really slick Powerpoint presentation. Most of the time, we'd make a video on CD that we could hand out.

That was in addition to the business plan, of course.

JK