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