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HI,
I have been searching for investors for a while now. I have had some luck but not really what I am looking for. I am wondering if anyone here has ever attempted to form a group of investors. I have interest from a lot of people about investing in my company. The issue is that the amounts are so small. I am not really sure how to handle that. I would love to hear any suggestions anyone may have.
Thanks
Cole
I read a good article about angel investors. "My life as an Angel, July 1997" in Inc. Magazine. Also May `06 pg 69, "Street Smarts by Norm Brodskky" also in Inc. Great insight to angel investors. 2 other things I heard but no sure where. "better to have 10% of a watermellon than 90% of a grape" and second, someone was talking about an equity investor and set it up so the equity partner was majority until they got their investment back then some how restructured to give majority to the owner.
Hope this helps.
Cole,
From your initial post here - I see 2 areas of concern (one legal, one operational).
Legal - since you say the amount each investor wants to invest, I assume that some (if not all) would be classified as "non-accredited". SEC regulations limit how many can invest in your business. (your state may also place restrictions)
Forming a group (separate entity) for the purpose of investing in your business would not avoid this limit.
Operational - If you have a bunch of investors, you should plan to communicate with them on a regular basis (at least quarterly). Some may feel the need to have more than a quarterly update- which may take up a huge chunk of your time.
If you are going to sell equity to a number of investors, especially ones that are non-accredited, I strongly recommend that you have the proper documentation. That will help you avoid problems later.
Robert Johnson
I have been seeking investors as well, but for a project requiring $6 million in funds at 100% equity stake to start for the investor, and have gotten some responses from interested persons requesting my business plan when its finalized dispite the 100% position.
I`ve noticed that it doesn`t matter how much the capital is that your looking for, but the sound plan is what they want to see, and of course the big question you have to answer for the investor is "whats in it for me?"
I hope this helps...
Jerik Cu Gelert
Cole,
I`m looking into SCORE.org right now for the very thing you seek. There you can discuss in details the needs you have and the requirements that you;ll have to meet to raise the funding that you require.
I`m leaning toward a Regulation D offering right now. It`s mostly about documenting everything and letting potential investors know that you`ve thought your situation through very thoroghly and then spell out the growth expectations and the risks.
It appears that you are well on your way already. Let us know what you decide to do and how it works out.
BTW. If you are comfortable with lots of little handshake type loans with simple payback terms, you might want to look into Circle Lending. They do a great job managing small loans to friends and family. If you think it`s going to get a lot more serious though, you should consult your attorney and accountant about how to best present your offer while minimizing your risk.
~Eric
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