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The number one concern of start-up entrepreneurs and growing small business owners and managers is how to finance their venture. When the personal financial resources of the entrepreneur are exhausted, when the
tradition of going to family and friends for “cradle equity” has been thoroughly “worked,” and when incurring personal debt from a bank for a loan is no longer a viable option, then raising private capital can be one of the
toughest challenges for many entrepreneurs. Whether you have an as-yet-unproven, visionary start-up or already own a small, established company hungry for expansion capital, access to capital on the right terms is critical to your success.

Available for financing are an array of alternative capital resources, but the problems center on which are most appropriate for you and where do you find them. While economic conditions during the previous four years have had an impact on capital availability and increased competition among entrepreneurs for that capital, alternative, nontraditional capital resources are out there.

For some companies—those possessing the right mix of attributes money will be available; yet for many, understanding where to look, how to present, and how much money is needed comprise just a few of the questions for which business owners are ill-prepared to answer. How do you uncover the dozens of alternative ways to finance your company and prepare for raising capital?

How to identify qualified, hard-to-find private investors who prize their privacy is a case in point. Also, how do you motivate them to read your business plan, to meet with you, and how do you interest them in your venture and your deal? Sometimes asking the less obvious questions is most useful (e.g., when should you not seek angel capital?). Are your current money sources structured most advantageously for you? Have you overpaid? Has your company grown and have you recognized the changing needs of your business? Are you prepared for your company’s capital requirements in the next phase of growth?

Capital is the single most important ingredient in getting a venture off the ground. But finding it can be a challenge—particularly if you are running out of funding options. Suppose your venture is too small for  institutional players. What do you do once you’ve exhausted your personal financial resources? Where do you go after the banks, the leasing companies, the venture capital firms have turned you down? Which financing sources are worth exploring and which are not (e.g., conventional lenders, institutional venture capitalists, or business angels?).

Also, what type of information do investors expect, and how do you effectively present that information? What are private, not institutional, investors looking for? What documentation is needed, and how do you craft your presentation to investors? International Capital Resources’ proprietary research in building the largest database of business angel investors in the United States provides valuable insights into the motivations, preferences, and expectations of the selective private equity investor. Angel Capital is about the manner in which successful entrepreneurs must go about the business of raising capital, the efficient manner of knowing
where they are, where they are going, what they are doing, and how they are doing it. This book describes a model of the funding process uniquely suited to the private placement transaction. A model of this process is the only way to consciously manage the increasingly demanding, exhausting process of efficiently and effectively raising money.

public domain directory of out-of-date funding sources available in any library. It is, instead, a set of tools that enables entrepreneurs to (1) determine whether private investors are a workable and appropriate source of capital for their deal, (2) increase their awareness of the private investor perspective so they can frame an investment proposal with the greatest chance for success, and (3) develop a winning strategy to locate, contact, and establish relationships with angel investors.

GERALD BENJAMIN, M.S.
JOEL MARGULIS