Investment of $1 millionStill, he and other entrepreneurs who have used the Internet to find investments and loans view it as a godsend, as testimonials on the Web sites show.
The sites generally separate between those where small businesses seek investors, like RaiseCapital, and those where the businesses seek loans, though there is some crossover. GoBigNetwork offers both services, but it focuses mostly on investments.
RaiseCapital, GoBigNetwork and Go4Funding, another major site for finding investors, say about 3,000 to 6,000 small businesses use their site at any given time, and they report about the same number of investors.
Investments range from $10,000 to $10 million, and most are in the $100,000 to $1 million range.
Sites focused on lending include OndeckCapital.com, which lends its own capital to small businesses, and LendingClub.com, which matches lenders and borrowers for personal and small business loans.
Ondeck lent about $20 million last year, and LendingClub matched about the same amount, though only 20 percent of loans on its site are business loans (the rest are personal).
Faster and less expensiveLawrence Gelburd, a lecturer at University of Pennsylvania's Wharton business school and an entrepreneur himself, says small businesses would be wise to turn to the Web for investors and lenders. "It's a much faster and less expensive way to make contacts," he points out.
"You can get directly to people and don't have to set up meetings. It's nonexclusive. You don't have to sign up with a broker and can be on three different sites in front of 20 different faces." And of course you eliminate the time and expense of travel.
To be sure, when it comes down to someone actually investing in your company, it's best to meet the person face-to-face. "But this is great when you can't do that," Gelburd says.
Small businesses should realize that they generally won't garner money on the Internet as easily as Fontenot's nurse staffing company did. "It's like a dating game, but with a 100-to-1 ratio," says Sean O'Brien, marketing director for GoBigNetwork.
Bertsch estimates that less than 5 percent of small businesses coming to RaiseCapital in search of an investor actually snag one. Still, he says that’s much better than the success rate for entrepreneurs who seek venture capital or angel investors in general -- well below 1 percent.