0816_TOEFL-Test-and-Score-Manual-1997

44 ● 201 Great Ideas for Your Small Business
“If you don’t have personal assets, then you need other people’s money,
or OPM,” said Nichols. “That’s when I ask company executives, ‘Who is
going to listen to your story?’ ”
So, ask yourself who knows you, who trusts you, and who has made
money with you before?
Nichols said this question often stops business owners cold. “But if
friends and family won’t lend you money, why should a stranger?”
Raising money in the past two years has been extremely tough. The
Great Recession created by the mortgage and Wall Street meltdown severely
impacted the venture capital market. And, finding a bank to finance a small
deal is even tougher, Nichols said.
Another barrier to financing: if you are lucky enough to find investors,
be prepared to step aside. “Often, the person who has invented the product
or the company’s current CEO is not the one who can take the company to
the next level,” Nichols cautioned.
When it comes to her own investments, Nichols said she looks for
well-managed, fast-growth businesses, including “leading edge biotech.”
“Companies needing $5 to $10 million are my sweet spot,” she said,
noting that as soon as the money is in the door, the management team
needs to be able to discuss who will buy the company down the road.
“Private investors are all about the exit,” said Nichols. “They want to
know ‘when am I going to get my money back and how much?’ ”
Despite the recession and limited number of venture-backed deals, VCs
still want to earn 10 times their initial investment.
When she’s not working on her own deals, Nichols does business development
for vCFO.com and works with Golden Seeds, an angel investment
fund. (See Great Idea #28 for more about vCFO.com.)
GREAT
Find Yourself an Angel
Bettina Hein is the perfect person to ask about raising
angel capital. She’s raised $9 million to start two
IDEA
small, high-tech companies—with about $6 million coming from angel or
private investors. After founding a speech technology software company
in her native Switzerland, she moved to Boston to start another venture,