With the credit markets in a snarl, many small business owners are opting out of the agonizing search for a bank lender and going another route: They’re finding a partner. The Internet has made it easier than ever to locate one, too.
Investors and business owners are congregating at sites such as 6-year-old PartnerUp, which is seeing 400,000 visitors a month, says founder and chief executive Steve Nielsen. The site provides a virtual community where entrepreneurs and investors can feel each other out. If they hit it off, they move offline to make their partnership deals; PartnerUp doesn’t take a cut.
It’s free to join PartnerUp, but some businesses pony up for paid feature listings. The site is ad supported (but thankfully not too ad cluttered). A competitor, BusinessPartners.com, charges monthly fees ranging from $20 to $75.
Partnering can solve more problems than just funding. Internet entrepreneur Nathan Hangan of Twitter Rockstar fame recently called joint-venture partnering the key to making money online because it allows would-be business owners to get expertise they need for free. Don’t know how to code your site? Partner with someone who does.
PartnerUp began with a focus on helping business owners find money. But in these wallet-pinching times, Nielsen says the site is seeing more and more expertise matches as entrepreneurs barter with company equity for the tasks they need done. Desperate times call for serious creativity in getting a business off the ground.
Nielsen tells me that since people are really struggling to come up with capital, if someone needs an electrical engineer to create a product, instead of hiring an engineer with cash, they can find someone willing to work for equity in the business. He told me, “One business owner found a possible vendor for their business that owned a piece of real estate; so now they’re buying the vendor’s product and the vendor’s giving them a cheap rent on some office space.”
Most partners who connect with businesses on PartnerUp are in the same city as the business, Nielsen says. But about one-quarter of them aren’t. For these entrepreneurs, sites such as PartnerUp are a chance to connect with investors they might well never have met, no matter how many local business networking events they attended.
“The new virtual generation doesn’t care where you are,” he says.