Securing funding is one of the most important aspects of any growing business. But how do you ask for it?
Editor's note: This is the sixth column in a series of weekly Q&As in which entrepreneurs featured in the Women Entrepreneurs Special Report answer questions submitted by readers. You can submit a question for consideration by writing to email@example.com.
I founded a computer company startup and now I want to ask some famous people from the industry for financial help, but most of them are unreachable and even finding their e-mail addresses is impossible for me. I was wondering if you can help me, and tell me how to ask for financial help.
Securing funding is one of the most important aspects of any growing business. It is not always best to go to "famous" people since they typically don't personally fund new companies, even if the companies that they run do.
First, I would highly recommend that you have on your team a chief financial officer and also a vice-president of business development who know how to raise money. Once you have these team members in place, here are some of the possibilities:
1. Usually a company starts with seed money and the next step in its financing process is getting venture capital funding from one of hundreds of VC firms that exist. First, find out if a member of your team knows anyone who is a VC and ask for an introduction. Next, do your research. Find out which firms specialize in your segment and have not invested in your competition. Contact the partner in these firms.
2. Many corporations have investment arms run by someone in corporate development. These people can usually be found on a corporation's Web site. The same basics apply that you would use to make contact within the VC community—if you know someone, or someone who knows someone, start there. If not, do your research and make a cold call. You have nothing to lose and everything to gain.
3. Consider your big partners as potential investors.
The upside to corporate investors is that they are great endorsements for your company. The downside is they will sometimes insist on unfavorable terms for your business. If you're a hot commodity, you don't need to agree to these. So don't.
In any of these situations, it is critical to have a phone conversation with the key contact. Send a short e-mail explaining what the phone call is about, but insist on five to 10 minutes of live conversation. Most of these people don't answer the phone directly, so be ready to give the pitch to the executive assistant. Be polite but relentless in getting a scheduled call. On the call, you will want to give enough information to get the partner excited and invite you to present the business plan. Have a one- to two-page summary you can send to the partner, but don't send the whole presentation. Have fun!