2009 Small Business Guide
small business
Finding small business investors online

Tips for success

Experts recommend several steps for small businesses to improve their chances of success.

1. Produce an appealing self-description. "The most important thing is to present your idea in clear and concise language," Bertsch says. "I'm surprised how many we see with typos and presentations that are poorly worded or confusing. If your first crack is not your best, you won't be noticed."

2. Size of presentation matters. "A lot of times people post too much information: five to 10 pages, which drives away investors' attention," says Chandra Pemmasani, chief executive of Go4Funding. At the other extreme, "Sometimes it's just a few sentences," he says. "A lot of investors won't get excited by that."

3. Consider including video or pictures to give your business a visual appeal. "Those can be very helpful in adding to your presentation," Bertsch says. "If you're doing something like a restaurant, a picture tour adds good color."

Many of the sites offer ancillary services in addition to finding an investor or borrower. For example, Go4Funding has tabs on its home page titled "Need an Expert" and "Business Ideas."

As for the expert page, if you need a salesperson, a marketer or someone with any other kind of expertise, you can find them there, Pemmasani says. And by posting your business idea, "you can get other people's comments and even recruit people if they're interested," he notes.

Don't share too much

However, Bertsch recommends caution in sharing your business ideas, even with potential investors. "Depending on the nature of the investor, you have to be careful not to give away the store and have your idea stolen," he says. If there is cause for concern, just offer enough information to pique investors' interest.

RaiseCapital has examples of confidentiality agreements you can use with investors and suggests consultation with a lawyer.

Wharton's Gelburd stresses a buyer-beware approach in seeking money for your business on the Web. "Most people are honest, but it's very easy to get scammed online," he notes. "Sometimes people get a little too comfortable online and don't do their due diligence."

Employ the same caution you would exercise in any other usage of the internet. You may encounter criminals on line looking to steal anything from your identity, to your money to your intellectual capital. Don’t reveal any sensitive information until you are sure you can trust the potential investor/lender.

Gelburd recommends that you ask any potential investor or lender for three references. "If they won't give you that, I'd be nervous," he says.

Still, Gelburd and others say the process of searching for investors and lenders will continue to move online. Young people in particular already spend so much time on the internet that it's logical for them to use it in their entrepreneurial pursuits as well.

"They're on places like Facebook so much, that this comes very naturally to them," Gelburd says. "It's pretty clear that this will continue. I believe in the value of networking. It's the life of your business."

And the place to network if you're looking for investors and borrowers is the Internet.

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