Kyle's auto resale business needs $250,000 to $500,000 for inventory. Angel investors, not venture capitalists, are the right fit. Find them through word-of-mouth, local angel groups, accountants, lawyers, and industry events like auto shows. Look for investors who bring experience and connections, not just money.
Chapters
Hi, I'm Evan Carmichael. Welcome to another edition of Ask Evan. In today's episode, I'm going to answer a question from one of my forum readers, Kyle, who runs an auto company and wanted to raise money between a quarter million to half a million to be able to buy more cars so he can sell them again at a profit. And wanted my advice on how to raise capital to go out and do it. He said in the past he's gotten bank loans, but the market isn't working for him anymore. He's not able to get the bank loans, so wanted my advice on getting it through private equity, which is great. So private equity means angel investor or venture capitalist. For this situation, that amount of money, you're not looking at a venture capitalist, looking more on the angel side. You may not get one person to put in a quarter million or half a million, so maybe a collection of people. But it's definitely something that people could be interested in if you can show them the return on investment. So know that you're going after kind of rich individuals who have, you know, hopefully an interest in cars and can be able to afford to drop $50,000, $100,000, $200,000, you know, $250,000 into a new venture. The next thing is what people will finance. And you're in an ideal situation here where you're trying to expand the business. So the hardest type of money to raise is brand new startup, hey, I have an idea but haven't proved anything yet. Or you've already done this before, you're looking to expand and you're, you know, you need money to grow. Grow your business. That's the easiest type of business to be able to get money from. So in that sense, you're in a good position. In trying to go out there and find these angel investors, a lot of these deals are done by word of mouth. In some cities, depending on where you are, there are some angel groups that you can go and present to, and each angel group has their own format, if it's over dinner or a conference or whatever it is. But most people are not part of an angel group, and for the reason being, most people who are angel investors, if The minute they go out and say, "Hey, I'm an angel investor," they're gonna get bombarded with business plans. Everybody's gonna be sending them business plans. So most angel investors prefer to rely on word of mouth to be able to get deal flow. So you wanna be able to start talking to people who are potentially connected to angel investors. And a good source is to look at business lawyers and accountants, 'cause they see a lot of different entrepreneurs, and often entrepreneurs are a great source as a potential angel investor for you. So let them know what you're doing, let them know you need money, put it on their radar. Talk to a couple of, you know, accountants and business lawyers in your city so they know who you are. And even the general public, you know, as you start talking to people, the more you tell people specifically what you're looking for, the easier it is for them to help you. You put it on their radar screen. So the next time, you know, they're talking to someone who might be a potential investor, they can say, "Hey, I met this guy Kyle, he's got this great idea, maybe you should connect." So you want to start getting the word out there, but especially to guys like accountants and lawyers. When you're bringing on an investor, you want to make sure that they don't just give you money, but hopefully can add something to your business. Experience, connections, can open some doors for you, can maybe get you some good prices on the cars, or can get you some bulk sales, or whatever it is that they can add to your business beyond just giving you money. So that's always a big boost. So you want to find somebody ideally who's a car enthusiast, likes cars, sees the potential, has some experience in it, You might even look at sharing a booth with somebody at a local auto show to see who's coming through and pitch your opportunity and see if you get some interest there. But try to get somebody who has some experience in the industry, has a passion for it, and wants to help you beyond just giving you money and waiting to see a return. So I hope that helps, Kyle. If you guys like the video, please give it a thumbs up. It makes me want to do more videos for you guys. And if you have a comment or a question or something else to add to help Kyle, I'd love to see it if you want to leave a comment under the video. So thank you, and we'll see you on the next episode.
