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Searching for private money tips and tricks to finding the right investor?

Ksalazar

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Sep 16, 2018
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Hello Everyone

I am starting out my first fastlane business with a couple of partners and am new to this world of business. Both of my partners are experienced and have had business prior. I have some exposure but just wanted to get some tips on getting money from private lenders. From people that are experienced, I have gotten a couple of private lenders but will need to look for larger investors in the not too distant future to scale it up over time. I have completed my part of the business plan and have sold the idea to some investors. I am just looking for some creative ideas on how to go about finding more investors with bigger pockets. Any help would be highly appreciated.
 

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Vigilante

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@Kak yes. Me? No.
 

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JM35

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Hello Everyone

I am starting out my first fastlane business with a couple of partners and am new to this world of business. Both of my partners are experienced and have had business prior. I have some exposure but just wanted to get some tips on getting money from private lenders. From people that are experienced, I have gotten a couple of private lenders but will need to look for larger investors in the not too distant future to scale it up over time. I have completed my part of the business plan and have sold the idea to some investors. I am just looking for some creative ideas on how to go about finding more investors with bigger pockets. Any help would be highly appreciated.
How much are you looking to raise? Are you generating revenues yet?

If you are looking for 7-figure amounts of capital, then you might be best off engaging an investment bank that caters to the tech/VC markets. Debt likely won't be an option unless you or your partners have significant personal assets, and are willing, to collateralize the loan.
 
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Ksalazar

Ksalazar

Contributor
Sep 16, 2018
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Rhode Island
Are you looking for a lender or an equity investor? Those are two very different things...
I am looking for an equity investor for the long term 5 to 6 figure investment for a fair amount of shares in the company we are still developing part of it is already producing revenue but we are going to expand our marketing efforts and add services to add more monthly income. We dont have an issue with obtaining money from a lender and it is an option we are looking at.
 
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Ksalazar

Ksalazar

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Sep 16, 2018
54
50
117
Rhode Island
How much are you looking to raise? Are you generating revenues yet?

If you are looking for 7-figure amounts of capital, then you might be best off engaging an investment bank that caters to the tech/VC markets. Debt likely won't be an option unless you or your partners have significant personal assets, and are willing, to collateralize the loan.
I am looking for a 5 to 6 figure equity investor for the business. We have been looking at loans from banks and have had it as a option. However real estate is part of our business plan and we do need private money down the road to help us get better deals on purchases and increase month to month cash flow.
 

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JScott

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I am looking for an equity investor for the long term 5 to 6 figure investment for a fair amount of shares in the company we are still developing part of it is already producing revenue but we are going to expand our marketing efforts and add services to add more monthly income. We dont have an issue with obtaining money from a lender and it is an option we are looking at.
As someone who makes equity investments, I would always recommend a startup consider debt before they look for equity. Especially if you're already generating revenue and have proven out your business model.

Why give up part of the company -- including some control -- for money when you don't have to?

Convertible debt is another option -- less risky than debt, but gives you more options than selling equity.
 

Brad S

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Jan 23, 2014
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Hello Everyone

I am starting out my first fastlane business with a couple of partners and am new to this world of business. Both of my partners are experienced and have had business prior. I have some exposure but just wanted to get some tips on getting money from private lenders. From people that are experienced, I have gotten a couple of private lenders but will need to look for larger investors in the not too distant future to scale it up over time. I have completed my part of the business plan and have sold the idea to some investors. I am just looking for some creative ideas on how to go about finding more investors with bigger pockets. Any help would be highly appreciated.
You say you have gotten a couple of private lenders...

Where did you find them?

What are the terms?

Amount, length, interest etc.

I've been searching for some private lenders myself.

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JScott

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You say you have gotten a couple of private lenders...

Where did you find them?

What are the terms?

Amount, length, interest etc.

I've been searching for some private lenders myself.
Private lenders are everywhere. Anyone with cash that they don't know how to invest, anyone with retirement funds looking for a safer return, anyone who is interested in investing but doesn't have the knowledge or time, etc.

You can certainly just approach people you know (family, friends, professionals in your network) and ask if they're interested in lending, but I've found that if you just talk about what you do as an investor, there will be plenty of people who broach the subject to you about potentially partnering, lending or investing with you in some way. And, you'll find that that the more successful deals you do, the more the people in your network start to notice your success and the more they'll want to work with you.

As for terms, it's all over the board. I've loaned and borrowed money at 12%; I've loaned and borrowed money at 8%. I've loaned and borrowed on 2 month terms; I've loaned and borrowed open-ended where the borrower kept the capital for years and just made quarterly interest payments. I've loaned and borrowed against real estate, against business assets and in a couple cases (people I know and trust) completely unsecured.

Every situation is different, and the terms, length and rate will be related to your relationship with the lender. Remember, private lending isn't about trust in the deal -- it's about trust in the borrower and relationship. Most private lenders will be lending because of YOU, regardless of the deal.
 

Brad S

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Jan 23, 2014
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@JScott

Thanks for the reply.

I actually know more about lending than borrowing.

I lend money to people for my business.

I have loaned all the money or "inventory" I have and there is still
unmet demand.

I've reached the end of my network that's why I'll have to be approaching strangers to borrow at a lower rate and lend at a higher one.

You say private lenders are everywhere and that may be true in theory but gaining the trust of a stranger with no introduction has proven difficult.

Most people I've encountered are risk averse and not hungry for more.

Most aren't actively looking to make money with their money especially involving any degree of risk.

Any group of people (such as small business owners for example), or Lending markets online that you recommend to find people hungry for returns on their money?






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JScott

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@JScott
You say private lenders are everywhere and that may be true in theory but gaining the trust of a stranger with no introduction has proven difficult.
Absolutely agreed.

The key is that you need to build a relationship, so that they aren't strangers. Most people I know that borrow private money never try to sell themselves (at least not until the other side indicates they are ready for it). This can take time, but that's just part of the process.

Here's an example... A bunch of years ago, I was at a friend's party. I joined a conversation with a friend and a guy he knew. Discussion got to what we do, and I mentioned that I flipped houses. He was intrigued, we talked for a while and then walked away. Later in the night, he comes over to me and asks if I ever worked with "silent partners," as he had heard flipping houses was a good business (it was at that time), and had some money he was looking to invest. He had apparently talked to our mutual friend who told him I was trustworthy and had been successful.

I wasn't looking for money at the time, and politely turned him down. He asked for my business card, and every couple months he sent me an email reminding me that he had money to invest. Every time I politely said that I had more money than I could put to work, and turned him down.

Finally, one day I had a project that I needed funds for, so I shot the guy an email and asked him if he wanted to make a loan at 10% for a year. He didn't hesitate and agreed to loan the money after asking only one or two basic questions (about the paperwork). I don't borrow a lot of money anymore, but whenever I do, he's my go-to guy -- he never asks any questions about the deal, and trusts me that the collateral is sufficient to secure his loan.

We've become pretty good "business friends." And what I've since learned was that the reason he trusted me so much when I finally asked him for money was that I turned him down so many times. He figured that if I was looking to scam him, I wouldn't have waited over a year to do it. :)

I've actually had similar situations with several private lenders. It might take some time, but I prefer to let them make the pitch/offer, and more times than not, by that point trust has already been built, and they have very few hesitations.

Remember, people are always more receptive to ideas when they believe it was THEIR idea.
 

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