Tips for raising money for a start-up?

I have a business idea that is (in my opinion, of course) a foolproof and unique twist on an existing concept that already works extremely well.
The only problem is that due to its complexity and technical requirements I would have to outsource for professional programming expertise which would cost in the figures of $2K-3K, by my estimates. With a fair bit of advertising (another $1K, minimum), I expect the project to go into significant profit within 2-3 months.
Some questions I have.

Does anyone here have experience with attracting investors and raising funds? Where and how did you do it?
How do you protect a business idea from being copied/stolen when looking for investors?
What sort of a return do potential investors expect and in what time frame?

That's all for now, might have more questions soon

 

Start with family/people you trust (preferably with money to invest).

When showing it to people you trust, this shouldn't be an issue. However proving someone ripped off on your idea is for the most part fruitless (from what i hear) because if they went to the trouble to actually produce intellectual property they created. I'd suggest having potential investors sign some sort of nondisclosure-like agreement before showing them your idea. I personally wouldn't do it

When your product is released, that's when the profits start. Some sort of percentage or fixed amount. Come to some sort of consensus with your investor. Preferably one were you get profit. I am reminded of the movie The Producers when the con men promised all their different investors half the profits....lesson here is dont promise more than you expect earn.


My 2 cents; my only experience is 2 years of a high school business class

 

While that's a possibility, I am one who advocates against mixing family with business. Should anything go wrong, I don't want to risk my relationships.

It's a relatively low sum that I require, though ($5k tops). My main concern is how much of a margin should I promise an investor? Since I can't put a realistic estimate for the size of the profits, is a fixed agreement for $6k returned in increments over 6 months or something like that a good proposition? I've never done anything like this before, some guidance would be appreciated.

Thanks for the input!

 

If you dont want to use family/friends that leaves 2 options. 1. Bank, you can always loan the money needed in the hopes that you can pay back the interest to avoid going into default. or 2. seeking outside investors. With this option it is best to focus on what you are offering them. Dont focus on how well the business is going to do. Focus on what you are offering them and how you will be able to afford that. Most investors will be looking for quick but sustainable returns.

 

Well you have to have a business model and most investors won't even hear you out if you don't have some sort of example of results. You have to go in well prepared if you are talking to lone investors. You could always get a title loan if you own a car that is worth enough, or a loan against land you own. If the business idea is really good enough then you should have no problem paying it back. The bad thing is that you will always need more money then what you think. That is just how business works, so make sure when you ask for money you build in a nice protective pocket of cash just in case.

 

So long as you need a smaller amount of capitol, I would suggest checking out a peer to peer (p2p) lending site, such as prosper.com. p2p sites offer consumers the option to acquire loans from individuals, whereby cutting out the middle man (lending institutions), allowing investors to achieve higher ROI and recipients to achieve better interest rates. I have not personally used the site, however I intend on using it for my next investment property purchase.

 

i guess it's better to copyright it before showing it to anybody else. Then move to some potential local investors who already funded to some organizations.

 

Yeah family and business don't work together. As for funding, it's very hard to convince people that the plan is full proof. $2k-3 figures is a lot of money, the only possible way of getting that much money is creating a bot and making it premium on powerbot, starting up a private server [will take a while], or merching with gp. These are possibly long term goals. If you need the cash fast I'd suggest selling self-owned items worth good money.