Next, the "angel investor" is a remarkable boon to any company fortunate enough to attract one.  Angel investors are individuals with large net worths who have a desire to invest seed money in start-up companies.  The market for angel investors is private and informal.  Angels usually are found by word of mouth.  However, a trip to the local council on foundations for private donor information could prove helpful.  The U.S. Small Business Administration estimates that, nationwide, there are approximately 250,000 active angels investing in about 30,000 companies each year.

Finally, it may be possible to obtain funding directly from your local city and state governments.  Cities have become much more interested than before in attracting new companies to their economic base.  Therefore, they have become very assertive in offering creative financial packages.

Development Stage           

The second stage of a venture capital funded company is called the "development stage."  In this stage, the company is actively attempting to develop its main products or  services.  Companies in this phase typically seek investment dollars from private sources such as angel investors or venture capitalists.  Due to the difficulty of raising capital at this risky stage of a company's development, initial public offerings (IPO's) may be possible as an alternate means of obtaining funding.  The downside, of course, is that entrepreneurs lose a great deal of personal control when companies "go public."

Maturity Stage           

The third stage is call "maturity."  During this stage, companies with established track records may obtain additional or "expansion" funding from venture capitalists or from conventional banking sources.  Also, some investors who come in on the ground floor may establish a plan for investing that progresses in installments.  After each installment is paid, the investor will wait to see that predetermined criteria are met before advancing the next installment.  In addition, satisfied customers and strategic partners sometimes provide another source of venture capital at the "mature" stage.  This is especially true if the company's customers are other institutions with a desire to form a future or continuing business relationship with the new company.