services. “Our investors are typically looking for fast-growth, emerging companies.”
Businesses can sign up for a match by submitting an application, questionnaire, full business plan and executive summary to the Capital Network. The group will connect entrepreneurs with interested investors for $450 and charges $950 to investors who want to become members of the network. For more information, contact Bob Mathot at 512-305-0831, or www.thecapitalnetwork.com.
The Small Business Administration Office of Advocacy sponsors a computerized network called the Angle Capital Electronic Network (ACE-Net). ACE-Net allows angel investors to view the securities’ offerings of small, growing companies. Businesses listed with ACE-Net are typically seeking between $250,000 and $5 million in equity financing.
Companies interested in having their securities offering information listed in the ACE-Net database must complete an application and pay a yearly $450 fee. For information, contact the SBA Office of Advocacy at 409 Third St. SW, Washington, DC 20416, or call 202-205-6532. Contact ACE-Net at https://acenet.sr.unh.edu. .
3 SUPPLIER FINANCING
Grocery chain owner Johny Johnson used the money from his investor angel as collateral to obtain a $3 million loan. That loan came from his main supplier, Rich Food Holdings. The Richmond, Virginia, company is the fourth largest grocery wholesaler in the country.
“They loaned me $3 million to buy my buildings, equipment and
groceries,” Johnson says. “In exchange, I agreed to purchase 60% of my inventory form them.” Suppliers have a vested interest in helping you meet your capital needs. Their flexibility with loans and credit lines translates into successful and loyal customers.
Supplier financing arrangements vary according to your needs. For instance, a supplier can help mitigate up-front cash shortages by agreeing to ship merchandise on consignment. This way you only pay for goods when you make a sale. Many furniture and clothing stores take advantage of consignment selling.
Enter lease agreements. Rather than buy equipment outright, you can hold onto your cash and get a tax deduction to boot. Some suppliers are willing to extend credit terms over a lengthy time period. For example, you may buy $150,000 worth of materials over the course of a few months, but stretch the payments on the products over two years.
Keep in mind: the supplier may ask you to exclusively buy from their operation in exchange for loans and credit. Also, don’t rely on oral agreements. Says Johnson, “A lot of suppliers want to make the agreement on a handshake. l always draw up a written agreement and have it viewed by attorneys.”
Before agreeing to any deal, make sure the supplier’s price for goods is competitive. Add a clause allowing you to renegotiate if prices change during the course of the agreement.
4 VENTURE CAPITAL FOR SMALL BUSINESSES
Small business investment companies (SBICs) invested $2.4 billion in small businesses last year. SBICs operate much like venture capital firms, using money pooled from private businesses. But they are licensed by the SBA to fill an important gap in the billion-dollar venture capital industry.
On average, 60% of the money invested by traditional venture capital firms goes toward high-tech, software and big-tech