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A reader asks:  My co-founder and I recently launched a new web venture, and we’re running out of money.  We are trying to raise about $250K, but we don’t have any friends or family who can afford to invest – and we don’t know any angel investors.  Can you give us some advice as to what we can do to raise money?

Answer: You’re hardly alone in this predicament. While it’s tough convincing investors of the value of your venture, sometimes it’s nearly as hard to find potential investors in the first place. Here are three different approaches to help out.

Network. Network. Network. – The best advice I can give you is to hustle and build relationships in order to get “warm” introductions to investors. These can be anything from an introductory phone call to an email from a middleman the investor trusts and respects.  The ideal middleman (or woman) is a successful entrepreneur whom that investor has backed.

After that introduction, arrange a meeting with the investors and try to get them excited about your venture.  Gagan Biyani, the co-founder and President of Udemy, explains the process in his solid post, “Udemy’s $1M Fundraising: Lessons Learned about Pitching Investors from a First-Time Entrepreneur” and specifically notes that:

I went to every conference I could and literally killed myself while there.  I attended tons of networking events and met as many entrepreneurs and investors as I could. While at events/conferences, I rarely ate dinner because I was too busy schmoozing and grabbing business cards.  During the weekdays, I’d spend hours e-mailing potential [investors] to start using Udemy. . . .

It takes tenacity and resourcefulness – qualities that every great entrepreneur possesses.

Seek an advisor.  You could also apply to one of the growing number of startup mentorship programs, which typically provide not only coaching and counsel, but also a little seed capital.  For first-time entrepreneurs who have little experience, money or contacts, these programs can offer a “win, win, win” opportunity.

Y Combinator, founded in 2005 by startup guru Paul Graham and author Jessica Livingston, is the most successful and high-profile mentorship program and runs two three-month sessions per year in Silicon Valley.

TechStars, founded by investors David Cohen and Brad Feld, offers a similar three-month program once per year in four different cities: Boulder, Boston, New York and Seattle.  Startups receive up to $18,000 in seed funding for a 6 percent equity stake, intensive mentorship and the chance to pitch to investors at the end of the program.

There is a great list of other programs here.

Apply to an angel group.  Another alternative, if you have a product and/or traction, is to apply directly to an angel group online.  Some of them (such as AngelList) will make introductions to angel investors on your behalf; others (such as Open Angel Forum) will require you to present to angels in person, if you’re accepted.  One quick warning: watch-out for scam angel groups that require you to pay to apply and/or present to them.  Indeed, as Jason Calacanis, a successful entrepreneur, has pointed out, charging startups to pitch investors is “predatory” and “low-class.”

There is a comprehensive list of angel groups (divided by regions) here.

Startup owners: Got a legal question about your business? Submit it in the comments below or email Scott directly. It could end up in an upcoming “Ask the Attorney” column.

Scott Edward Walker is the founder and CEO of Walker Corporate Law Group, PLLC, a law firm specializing in the representation of entrepreneurs. Disclaimer: This “Ask the Attorney” post discusses general legal issues, but it does not constitute legal advice in any respect.  No reader should act or refrain from acting on the basis of any information presented herein without seeking the advice of counsel in the relevant jurisdiction.  VentureBeat, the author and the author’s firm expressly disclaim all liability in respect of any actions taken or not taken based on any contents of this post.

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