Venture Capitalists

There are a number of people who are willing to put up money to support a business. Historically, venture capitalists (also known as equity investors) have taken on business risks in exchange for a higher profit than a bank might expect. This usually means that the investor will get a part of the company, either in the form of shares, in the case of a corporation, or as a share of the partnership. Remember that there are no guarantees in business, even when the numbers are good, and you should make sure your investor knows there may be risk involved in putting money in a business.

There are two primary kinds of partnerships. A "general partnership" is one in which all the partners share equally in the work, as well as in the profits according the proportion of that partner's share. However, most equity investors are more likely to be involved in a "limited partnership." Under this form of organization, you as the business founder retain control of the day-to-day operation of the company as general partner. (You are, unfortunately, also the only one who is liable in the face of partnership debts or lawsuits against the company.) The investors are limited partners whose risk is limited only to the amount they have put into the company.

State and Federal Government

There are a number of government agencies that put money into small businesses. The best place to start is the federal government's Small Business Administration, though this is by no means the only agency involved in such work. Your local elected officials may be able to steer you in the right direction.

Friends and Relatives

The people who are closest to you may be your most vocal supporters, and if they are in a position to lend you money, you should certainly ask. However, even though these people may know you well, you should remember to keep the process as professional as possible. (For example, don't ask for money at a social event.) Finally, you should make sure that your friends and relatives have an easy way to back out gracefully if they cannot or will not lend you the money for your project.