If you are thinking of funding a new business with private investors, expect them to want to know something about you personally. Investing in a start up is scary for everyone involved. You may have people, you know very well, in mind to ask for start up capital, but you may also need to take your idea to people you don’t know very well. There are certainly people who are willing to invest in an idea they believe will turn a good profit. Therefore, along with your well written business plan, give investors personal references.
Try to avoid your best friend. Pick business people who have known you and worked with you closely. What you’re going for is a professional reference with a heaping dose of personal opinion, too. If you are a member of a professional organization or a service organization, you may want to ask some of those people to be references. Explain that you are soliciting personal investors for your new business, and ask them to give their opinion of why you will be a good risk. If the investors live in the same community as your references, you may try to find people who would know your investors.
When asking people to invest in your idea, it’s very important that they feel you are a hard worker, resourceful, well respected. If someone your investors respect says that you’re a good bet, then it will really help you sell your proposal. Always keep in close contact with those references once they’ve done you the favor. You want them to know that their good word was appreciated, and that you are everything they said you would be. With the right people supporting you financially and socially, you have a much better chance at creating a great new business that will meet it’s profit projections.