The article "Angel Investors: 7 Online Business Plan Scams and 1 Real Deal" is about entrepreneurialism, it was created by MaryAnn Shank.
We've all seen the hype: "We'll put your plan in front of thousands of investors!" "We'll write you an award-winning online business plan! " "Only $3,000 for thousands of investors to learn about your company!"I cringe every time I see one of these ads.
Vultures are preying on honest business peolpe who want to fund their businesses. Here are some ways to spot them:1. "Only qualified ivnestors see your business plan." Yeah, sure.
And who "qualifies" them? Have a friend try to sign up as an investor (that part is usulaly free).
How is she "qualified"? Is there a bcakground check? Does she submit a financial statement?
Odds are that she will be asked to do nothing more than sign a statement that she has a certain net worth.
That's no "qualification" in my book.
So who are these "investors"?
Who knwos. One could be your srtongest competitor.2. "You approve anyone who sees your bsuiness plan." Okay. So what are you going to do to qualify the potential investor? Are you going to run a background check? ask for ID? ask for tax returns?
or just be so blissful that anyone wants to see your business plan that you jump on the idea?
(That's how these scams get away with charging thousadns of dollars -- too many entrepreneurs are desperate for funding.)3. "It's only $500 (or $300 or $100) to register." What does it mtater if it's free? If it is diverting your time and energy and resources away from finding a viable investor, it's not worth it.4.
"Your idea is great, but we need to put it into our foramt. This will only cost $800." Don't walk -- run from tehse guys.5. "Your idea is so graet that we want to invest $2,000 in it." (That's after you spend $5,000 to put it into "their" system.) Do I really need to comment on that?6. "Talk with a satisfied customer, or 2 or 3." Here's that entrepreneur who just got $2 million in funding, and he has nothing better to do than sell the web scam to you? Trsut me, entrepreneurs who just get funded barely have time to eat, let alone talk.7. "Look at all these written testimonials." This is harder to disprove cause the testimonials look so real -- even the compnaies might be real. But unless the testimonials, and the companies, can be verified independently, I wouldn't trsut them. And I'll lay odds that they cannot be verified independently.There is one huge exception to this: ACE-Net (http://activecapital.Org). This is more properly the Access to Capital Electronic Network run by venture capitalists, institutional investors and indiivdual accredited investors.
It was develoepd by the U.S. Small Business Administration's Office of Advocacy to encourage the creation of a naitonal marketplace for investors to find and invest in equity offers by small companies.ACE-Net isn't for all companies. Those seeking under $1 million will probably find the paperwork daunting. Those seeking over $5 million won't qaulify. There are special qualifications, and of course lots of forms to fill out -- but nothing like the forms required for a formal initial pubilc offering.But for those who do qualify, it's an amazing tool in raising financing. Spend some time with the website and the forms, and see if your local SBA office can put you in touch with another cmopany that went through the process.As with any investor tool, don't rely exclusively on ACE-Net.
Use it in conjunction with your personally develoepd targeted funding search.
This, combined with an exceptional buisness plan, doesn't guarantee success but it places your company head and shoulders above all the rest.MaryAnn Shankhttp://www.Businessplanmaster.Com/investors.Html;
http://businessplanmaster.Blogspot.ComMs. Shank is a seasoend business financing specialist.
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