One way to attract private investors to your company
is to find them through a "matchmaking" service.
Such services exist at universities and among local economic-development
groups across the United States.
How is a matchmaking group different from an investment
banker or broker?
Matchmaking groups are information services. They tell
prospective investors about business deals that fit their
parameters, tell business owners about potential investors,
and make introductions when appropriate. They don't take
a percentage of any deals that get consummated, and they
don't perform due diligence on either party. Their fees
are also lower: $450 for a six-month listing for companies
seeking capital and private investors; $950 for a venture-capital
or corporate investor.
What kind of investors get listed in matchmaking
Most are "angels," including successful entrepreneurs,
lawyers, accountants, and wealthy individuals. But such
databases also list venture capitalists and corporations
seeking strategic alliances.
What type of entrepreneurial situations are right?
Investors typically want a payoff of three to five times
their investment in three to five years. If a company
doesn't offer that growth potential, it's not right for
this financing market. That's also true if the owner is
looking for passive, rather than active, investors.