Entrepreneurs usually seek investments from three groups of people:

• Friends & Family (or FFF – Friends, Family, & Fools)
• Angel Investors – High Worth Individuals Investing their Own Funds
• Venture Capital Firms – Groups investing outside capital in large amounts

Friends & Family have always been the starting point, and are usually good anywhere from a few bucks to some tens of thousands of dollars.  The Venture Capital funds are usually reserved for the likes of small companies seeking large investments to go to the next level and are usually in the ballpark of over $1 million.  But a group exists in the middle for those seeking investments larger than what Friends & Family can offer, but under what a VC firm would raise.

This middle group is usually referred to as Angel Investors, and they are generally high-worth individuals seeking a bit of action with their money.  They either take a small % of the company in exchange for the funds, or just invest out of a sense of adventure with no expected return.

The great thing about the Internet is that it has connected entrepreneurs to Small Angel Investors in a way that was not possible before.  I say Small Angel Investors because one does not need to have a high net worth and can invest as little as $5 over the Internet.  Take the site Kiva, which connects blossoming entrepreneurs from around the globe to those with extra capital. The returns are not guaranteed, nor are they percentages that VC’s like to see, but if the entrepreneur makes a return on the investment, so will you as the donor.

Also, look at an industry in the midst of dramatic changes – the music industry.  In the past, a musician with a small following could approach a record label, and in exchange for their soul, could receive money to record an album, buy equipment, or tour the USA.  Now that funds are all but frozen at record labels, they can no longer act as Angel Investors to promising musicians (if you look nowadays, record labels usually only pick artists who are entrepreneurs and have created an album, tour, and following all by themselves).

That role has now gone to sites such as KickStarter.  Kickstarter is the self-proclaimed “funding platform for artists, designers, filmmakers, musicians, journalists, inventors, explorers…”  My buddy and bandmate, Tyler Herrin, is currently using this platform to raise funds for his current album.  Through Kickstarter, Tyler can raise the necessary funds for his album.  And in exchange for these funds, Tyler does not have to give away the rights to his songs or a % of his earnings.  What he does is offer exclusive gifts and shows for the biggest backers.

This is really a brilliant way for entrepreneurs with an artistic bent to raise funds.  Kickstarter profiles are easily shared on social networking sites such as Facebook, Twitter, and MySpace.

So, whether you are an entrepreneur in Africa, a musician in Atlanta, or a small business owner in Timbuktu, there are many options available for you in which to raise funds for your endeavor.  This is really where social networking can play a big part for your business/band/etc.  If you have created fans of your idea/art/proposal and have kept people “in the know,” they will be more likely to financially back your endeavor when capital is required.