Leveraging Connections for Business Funding (contributor – James Kim)


You’re smart. You know that, according to the U.S. Small Business Administration, 64% of net new jobs in the past 15 years have come from small businesses. You know that small businesses are booming. You also know that there are plenty of business solutions out there offered by companies so that you can easily get your business off the ground without having to worry about every small detail. What you don’t know, however, is where to get funding for that business idea rolling around in your head. But you know what? You know people. Here are the top three ways to gain business funding by leveraging your connections:

1. Family and friends

Why not try the most obvious place? Go ahead and see if you have any close acquaintances who are either interested in loaning you money or even becoming a partner. You already get along well with them, so you know that they’ll be nicer to talk to about this stuff than an employee at the nearest bank. Just make sure you write up a contract so that, when everything is over, you’re still friends.

2. Networking for angel investors

Angel investing has been booming in the past few years. According to Travis Kalanick, CEO and founder of UBER, this change is caused by the ever growing importance of social networking. He claims that “how you get angel funding has substantially changed because we know who to go after.  It’s very clear because they’re all blogging and tweeting out their interests on angel investing and their thoughts on it … Now, it’s much, much quicker to get these deals done.” So start looking around your existing social networks or jump in by looking at the people you know who are already there. There are plenty of people out there who would love to hear about your idea!

3. Connecting to venture capital

The research firm CB Insights notes that “venture capital investments rose 19 percent, to $21.8 billion in 2010 — the first annual increase since the downturn.” There’s more venture capital money out there than ever before, meaning there’s a better chance for you to be able to get a piece of the pie. However, venture capital isn’t as easy to get as angel investment. You’ll have to work through the people that you know to find an “in” to pitch your idea and have the chance at funding.

When it comes to funding your new business idea, don’t think that you have to go on an arduous quest. Instead, look around you at the connections you already have and see if you can rustle up some money that way. It’s not always easy, but it’s easier than having to start from scratch!

James Kim is a writer for Choosewhat.com. ChooseWhat is a company that provides product reviews and test data for business services and products.  Their goal is to help small companies make informed buying decisions on business solutions that help their business.