You may have a great idea and the confidence to know it will eventually take off and be profitable, but you need some start-up capital to get it off the ground. Traditional banks and small business loans can be an option, but they can be difficult to get. Most small businesses get off the ground with financial assistance from family and friends. If you have a tech idea or groundbreaking invention, you may be able to find professional investors willing to fund you. If you plan on building your business in a neighborhood that's struggling economically, you may be able to use a government program.

Method 1
Method 1 of 3:

Mobilizing Your Social Network

  1. 1
    Talk to friends and family. Since it can be difficult to find investors, many small business owners look to close friends and family to raise at least their initial seed money. It's easier to find investors if you've gotten your business off the ground than it is if you've only got an idea.[1]
    • If you have a friend or family member who is interested in any significant investment, treat it as a business transaction – not a gift. Put it in writing with a legal contract or investment agreement.
  2. 2
    Drum up interest on social media. Any social media accounts you have can be used to help you find investors. Set up business-specific pages and accounts, and encourage friends and family to connect to them and share them on their networks.[2]
    • Use posts not only to talk about your idea but also demonstrate the need for the product or service you want to offer. Include news and information about the neighborhood where you want your business to be located.
    • Encourage your friends and followers to share posts about your business and help you spread the word.
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  3. 3
    Provide incentives for likes or follows. When you set up dedicated social media accounts for your business, help spread the word by giving people who a reason to follow along. Contests and exclusive discounts will get more people on board.[3]
    • For example, if you're planning to open a coffee shop, you might offer a free cup of coffee to the first 20 people who like and share a post.
  4. 4
    Try crowdfunding sites. Many products and services lend themselves well to crowdfunding through a website such as Kickstarter or GoFundMe. Unique rewards at different levels of sponsorship can help attract micro-investors who are interested in supporting the next great idea.[4]
    • Crowdfunding also helps market your product or service. If you fund your project through contributions from 100 people, those are 100 people who are interested in your idea and want to see it succeed. Each of those 100 people will potentially tell their friends about your product or service.
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Method 2
Method 2 of 3:

Reaching Professional Investors

  1. 1
    Research investors thoroughly. Especially if you're strapped for cash, you may want to jump at the first offer that comes your way. However, your investors will have a hand in your business. It's worth taking the time to get to know them.[5]
    • Find out as much as you can about their investment track record. If they've previously invested in other companies, see how those companies are performing today.
    • The best investors for you will be people who have experience in your industry. For example, if you have an idea for a mobile app, it isn't necessary that your investors are computer engineers, but they should at least have a basic understanding of how your app works and what it does.
    • Based on your research, you should be able to come up with a list of 20 or 30 investors you can focus on.
  2. 2
    Learn common investment terms. When you start talking to professional investors, you'll hear them throwing terms around that may be unfamiliar to you. Take some time to research and read about venture capital and startup investing to avoid an embarrassing mistake.[6]
    • Investors will be interested in the value of your company. They may refer to pre-money valuation and post-money valuation. The pre-money valuation is the agreed-upon valuation of your company before funding. The post-money valuation is the pre-money valuation plus the amount of money invested.
    • Become familiar with rounds of investing. The first round typically is referred to as the "Seed" round. You may then proceed through A, B, and C rounds of financing.
    • When investors fund your company, they'll receive shares of stock in your company in exchange for their investment. Read up on the types of stock you can issue so you'll understand what investors are asking for.
  3. 3
    Check out online angel investor networks. Online networks, such as AngelList, do more than connect you with private investors. These websites also have educational resources that can help you build your business plan and market your idea.[7]
    • Craft your profile carefully and share your page with family and friends to gain possible connections.
  4. 4
    Craft a thorough business plan. An investment is not a loan. When you pitch your idea to investors, they want to know that they will eventually make money off of their investment.
    • Your business plan should clearly show how you intend to monetize your idea and when you expect to achieve a profit.
    • Also make sure your start-up expenses are realistic. Investors want to know that you have a reliable budget and will be able to launch your product or service without needing additional funding.
  5. 5
    Personalize your pitch for each investor. Successful private investors may hear hundreds of pitches every week. Stand out from the competition by letting each investor know exactly why they should have a personal interest in your project.
    • Ideally, your investors will provide not just money, but resources and expertise to help your project launch and succeed. When you're planning your pitch, think about what each specific investor could add to the project.
    • It may help if you can demonstrate that with the assistance of a particular investor, your project would perform better than if you used anyone else. Don't be afraid to appeal to an investor's ego. Encourage them to believe that they alone could provide an immense benefit to your project.
  6. 6
    Focus on selling yourself. Selling your product or service to an investor is only part of the equation. You also must convince them that you're the person to run the project and get it off the ground.[8]
    • Think about why you are uniquely suited to develop the project. It needs to be something beyond the fact that you came up with the idea.
    • Highlight related personal and professional experiences that give you insight into the project that no other person could have.
  7. 7
    Identify what makes your idea unique. Especially if you're trying to enter a relatively saturated market, you must be able to differentiate yourself from the competition. Be prepared to show potential investors what your product or service offers that your competitors don't.[9]
    • One way to do this is to focus on a particular niche that is relatively untapped. This could be a target location or a particular demographic.
  8. 8
    Learn to handle rejection well. When you first start looking for investors, you'll likely hear no far more often than you hear yes. Just because you weren't the right fit for a particular investor doesn't mean your idea isn't any good.[10]
    • If investors provide any reasons as to why they aren't willing to invest, take that feedback seriously and see if you can make any improvements in either your project or your pitch based on that.
  9. 9
    Look for a local incubator. An incubator or facilitator is a business designed to help develop and grow start-ups. Incubators are particularly common in the tech industry. Investors may take on a more hands-on, mentoring approach.[11]
    • In the US, check the website of the National Business Incubation Association to locate incubators near you that could possibly help you find investors.
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Method 3
Method 3 of 3:

Tapping Government Resources

  1. 1
    Start with local small business associations. A small business association in your area will have tips and resources to help you find investors for your business. These associations typically are nonprofit organizations, or are run by the government.
    • In the US, look for a Small Business Development Center (SBDC) near you. Often these are housed in community colleges. The SBDC can connect you with a mentor and provide connections in your industry.
    • Your local Chamber of Commerce will have resources for start-up businesses, and may also host events where you can meet business peers as well as potential investors.
  2. 2
    Use government funding for research and development. Especially if you're in the tech sector, you may be able to get government funding under the federal government's Small Business Innovation Research Program (SBIR). This program offers funds for technological innovation, recognizing research often is out of reach for startups.[12]
    • Awards follow the same development cycle as startup investment funding, with three phases or rounds of funding.
    • To qualify for the program, your company must be located in the US and the majority of its owners must be US citizens or permanent residents.
  3. 3
    Research state and local government programs. Your state or local government may have loans or investment programs to help small businesses raise start-up capital. Many of these programs are focused on specific types of businesses that will better their communities or meet the specific needs of a struggling neighborhood.
    • For example, if you are a woman or a minority, you may be able to join a program that provides start-up capital specifically for female-owned or minority-owned businesses.
    • Local governments also may have investment programs that provide funds to businesses located in particular parts of town, such as depressed neighborhoods.
  4. 4
    Check into federal loans. While the federal government doesn't offer grants for business startup and development, there are a number of loans that you and your business may qualify for. These loans have low interest rates and favorable payback options.[13]
    • Loans frequently are available for particular groups of people who are traditionally underrepresented in their industry, including women and minorities.
    • Development loans also may be available if you want to start your business in an area that is struggling economically, or if you want to work with people who are struggling, such as former prisoners or recovering drug addicts.
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Community Q&A

  • Question
    What are the stages of startup funding?
    Helena Ronis
    Helena Ronis
    Business Advisor
    Helena Ronis is Co-founder and CEO of AllFactors, a unified web analytics software to drive company's marketing and business growth. She has worked in product and marketing in the tech industry for over 8 years, and studied Digital Marketing & Analytics at the MIT Sloan School of Management Executive Program.
    Helena Ronis
    Business Advisor
    Expert Answer
    Pre-seed is the first stage of funding. You use the pre-seed to execute enough on the product to get to what's called a 'minimum viable product'. Once you have that, you can start looking to raise your first seed. Next, is the first seed. At this point, you've validated the market and have a minimum viable product, and now you're looking to grow. Sometimes seed funding will come in multiple rounds. Next is the second seed. Nowadays, especially in Silicon Valley, seeds can be broken down to a few branches that you can raise a first seed, a second seed, and then some companies even raise a third seed before they go for Series A. That allows them to have more freedom to get things done without worrying about complicated paperwork that a Series A round requires. Finally, you have the Series A stage. Series A comes when you've validated the company already in your seed. Now it's time to expand, and you need enough capital for that.
  • Question
    What is the meaning of the word investment?
    Community Answer
    Community Answer
    A placement of capital in expectation of deriving income or profit from its use.
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About This Article

Helena Ronis
Co-authored by:
Business Advisor
This article was co-authored by Helena Ronis and by wikiHow staff writer, Jennifer Mueller, JD. Helena Ronis is Co-founder and CEO of AllFactors, a unified web analytics software to drive company's marketing and business growth. She has worked in product and marketing in the tech industry for over 8 years, and studied Digital Marketing & Analytics at the MIT Sloan School of Management Executive Program. This article has been viewed 12,445 times.
7 votes - 85%
Co-authors: 4
Updated: September 22, 2021
Views: 12,445
Article SummaryX

To find investors, create social media pages for your business, and encourage friends and family to share them on their networks. You could also provide incentives for followers to share your page, such as discounts or a special prize. Additionally, try raising money through crowdfunding sites, like GoFundMe. Alternatively, use online resources like AngelList, which connect you with private investors and offer educational tools on how to plan your business. For tips on how to use government resources to find investors, keep reading!

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