Even in the best of times, venture capital was a dream for most small businesses, especially startups. Now it has dried up for almost everyone, so yes it is a pipe dream.
Angel investors are more interesting. Angel investors differ from venture capitalists because they are individual investors instead of a group, they invest their own money, and they can be more willing to take a flier on small and microbusinesses. Angels are people who invest in your business for a hefty piece of ownership. They do it usually because they are looking for a higher return on their money than they can get elsewhere, because they are interested in helping small businesses grow, or because they are looking for something interesting to do.
Because of the current economy there are fewer potential angels with the resources to put into businesses, but they are still around if you do some digging. Look for them locally. Think about people who know you and whom you do business with, customers, suppliers, employees or maybe your accountant. They don’t have to be rich—just willing to lean about your business and invest in it.
There are also people actively looking for businesses to invest in and you can often find them through angel investing groups. You can check with your local chamber of commerce or Small Business Development Center to see if there is an angel investing group were you live. You can also get plenty of help on the web. Two good sites are The Angel Capital Education Foundation (ACEF) which is a good place to learn the basics of angel investing, and the Angel Capital Association (ACE), which has a long directory of angel organizations.
Bottom line is that angels are still around. There just aren’t as many as there and they don’t have as much money to invest, and once you find one it can still be a tough sell to get an investment. But at least there is a chance if you are willing to do some digging.
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