In the last few weeks I have spent a lot of my time doing research into Venture Capital firms and what it is that they do. Mostly what they do in terms of what kinds of projects are they looking to invest their money into and why.
One of the most crucial things I learned is that the term "Start-Up" is an actual level. What I mean by this is that like many people I had believed that a "Small Business" and a "Start-Up" where essentially the same thing. This is actually not the case most of the time. What I learned is that it is very relative.
You search "small business" in wikipedia and you get
http://en.wikipedia.org/wiki/Small_business
The important part of this wiki is
"The legal definition of "small" varies by country and by industry. In the United States the Small Business Administration establishes small business size standards on an industry-by-industry basis, but generally specifies a small business as having fewer than 500 employees for manufacturing businesses and less than $7 million in annual receipts for most non-manufacturing businesses.[1] The definition can vary by circumstance – for example, a small business having fewer than 25 full-time equivalent employees with average annual wages below $50,000 qualifies for a tax credit under the health care reform bill Patient Protection and Affordable Care Act.[2]"
The "less than $7 million in annual receipts".
The reason this is so important is that all of the "small business tax breaks" and "special financing from the government" you hear about DON'T APPLY TO START UPS!!!
If you start digging through the Small Business Investor Alliance(http://www.nasbic.org/ ), or the National Venture Capital Association(http://www.nvca.org/). You start to find out that if your company is not generating some where in the neighborhood of $3-$4 million dollars in sales every year these groups and programs do not apply to you.
So a non-franchised business (mom and pop, Mel's Diner kinda place) that is basically worth less than $7 million dollars and/or has been in business(with actual proof of income) for less than 5 years is probably still considered a "Start-Up" by most investors,banks, government agency people's.
There is hope though, I have found a few companies that seem to be Venture Capital "Start-Up" friendly for all types of business.
Yes I know you would like a list of these companies but it's not something I am comfortable giving out until I have done my own "Due Diligence". I am not going to recommend an investor unless I know I can trust them.
The caveat to this is that when I do post the list and I will. That you people who are reading this(all 3 of you) will only approach these potential investors with responsible projects.
DO NOT approach an investor with a concept(Unless it's a 3 F investor. Family, Friend, Unfamiliar Financier). Basically any professional business investment firm needs to be approached correctly or you just wasting your precious time and their time.
Have the complete business plan done, have the 4 page investor package done, have a web-site of some sort up. Even if it just says "coming soon" on the site. Also be sure the name's and logo's you want to use are not copyrighted. Yeah you probably will have to contact a patent attorney.
The point is, you can have a great idea and if you just got drunk and though of it with your friends don't spend a couple of hours on it then hit up somebody from my list.
Spend the money on the thing's that you are capable of doing yourself and spend the time and energy to research what you don't know that you need to know.
The good news is that if your reading this your doing just that.
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