You started your own business, you are an Entrepreneur now.
 
When looking for finance, there are certain questions you will have to ask yourself first. Exactly what do you need investment for? How will finance take your company forward? Are you willing to give away shares in your company in exchange for investment?
 
Answering these questions will not only narrow down the kind of investor you are looking for, but will help focus your mind on exactly how you want your business to develop. E.Factor holds workshops on Funding regularly. If you are interested in attending one of these, check our Events calendar or drop an email via our "Ask a Coach" form.

Here is a sum-up to help you determine What type of investor suits your situation?

Friends & Family

This is always your best and cheapest option. The key here is that Friends & Family already know you, and (we assume!) trust you. That trust takes away the need for detailed information although you still need to be make sure you do all the right legal documentation for them. Friends & Family, particularly in times of recession, are the investors you should look for when you want to get things off the ground, you don't need too much money yet and you need it fairly quickly. The other advantage is, that once you have sold several percent of your equity to Friends & Family, you have a base valuation of your company which is good when talking to later stage investors.

Business angel
 
Business Angels are usually individual investors who provide capital for a business start-up. They bridge the gap between small investments and the major investments typically provided by Venture Capitalists. Angels often provide a second round of financing for businesses that want to grow, although some will provide seed funding for especially attractive start-ups. Since Angels take of a great deal of risk, they also expect a very high rate of return on their investments. But if you find the right Angel to take your business forward, this form of investment can be very rewarding for all concerned.
 
Venture capitalist
 
A new company - even one with a great idea - is a risky investment. But Venture Capitalists invest in such companies every day. When you are looking for major finance, but can't raise funds through a debt issue, or don't have a long operating history, you're most likely to get investment from a VC. Naturally that sort of risky investment comes at a cost. VC's will often not only require a portion of your company's equity, but also a direct say in company decision-making. This can be a very positive step, because you gain their business expertise as well as their financial support to take your company forward.
 
Financial Institution
 
Of course we all come across Financial Institutions - by this we mean retail banks, wholesale banks, investment banks, investment funds or any other type of officially regulated banking service. For an entrepreneur, the most important is the regular retail bank, be it a local branch office or an online one.
 
Your bank manager will become your friend and your foe all at once. Your friend when you are making money, and at the same time making him some money when you need cash, capital or a loan to finance trade for instance. Your foe, when you can't pay the interest you owe on those loans other arrangements. As an Entrepreneur, you will need to manage this relationship with care. You need it (for credit) but it can be costly (look at your credit card percentages for instance), more costly than for instance finding a sponsor or even a friendly investor or business angel.

Also have a look at Biz2Credit, an E.Factor partner and great way of getting a small business loan. This may be sufficient for you to get your initial funding, and has the benefit of not costing you anything in terms of equity.