How to Get Startup Funds in a Tight Market

Many people believe that venture capitalists (or VCs) are the answer. In fact, while VC money gets all the press, it's not right for most simple businesses. VCs work with less than 1% of businesses and primarily invest in "bugs and drugs": software, biotechnology, pharmaceuticals and green technology. The best way to get into this community is referrals from others who have received money from a VC. But, chances are, if you are starting small and aren't going green, you won't get much help from these guys.

Finally, Mary, consider angel investors. Angels are usually local rich guys and gals who back early-stage ventures for an ownership stake in your business. Angels invest their own money, unlike VCs. They want very high returns and the potential to earn five to 10 times their original investment within five years. Be cautious here: They will want an equity stake in your business or they will want you to have a plan to take it public. This may not fit your needs.