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Looking for 'angels'
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March 20, 2000: 12:11 p.m. ET
Raise venture capital dollars to buy out small biz fellow investors
By Jane Applegate
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NEW YORK (CNNfn) - Dear Jane: I and seven others started an oilfield rental company two years ago. Two of us have industry experience and the five others are passive investors. We have doubled the size of the company in two years and the net worth is $225,000. We'd like to buy out the passive investors but need to raise about $350,000.
You sound like the perfect candidate for a private placement or "angel" investment. If your business is growing, you should have no trouble raising $1 million to $3 million from investors. The secret is to find wealthy entrepreneurs in your industry who want to invest in a company they really understand.
Start looking for angels by joining professional or trade associations. Attend meetings, seminars and subscribe to trade journals to figure out who may be interested in your deal. Since most angels like to invest locally, contact well-respected attorneys and accountants who serve clients in the oil business. Let them know what you are doing and ask them to help you get the word out.
You'll have to write a clear and concise business plan, explaining how you will use part of the money to buy out your partners and the rest to support your expansion. Try to negotiate a firm price and make a firm deal to buy out your partners before you start looking for the money. You don't want them to raise the price when they hear that you just raised a few million dollars.
You might check out a few sites set up to help business owners find investors: http://www.garage.com/and http://www.moneyhunter.com/.
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