Making the Most of Online Matchmaking for Small Firms

Wil Schroter has started nine companies -- some successful, others not. Over the years, the entrepreneur has developed a network of investors, software developers and others who might be able to help out with his businesses. He says friends and acquaintances began to come to him on a regular basis, asking him to put them in touch with advisers or job candidates he knows.

"It dawned on me that there was no central Rolodex where anyone who's looking to start a company could come for information," says Mr. Schroter, 32.

Go Big Network LLC was born from that realization. The Web site, www.gobignetwork.com, launched in early 2006, is structured like a dating site for start-ups, where entrepreneurs can create profiles and post ads looking for investors and others to help start their businesses. Posting a profile is free, but users pay a subscription – an average of $49 a month -- to contact someone on the site, says Mr. Schroter, who is based in Columbus, Ohio.

Several lender-borrower matchmaking sites have popped up in recent months. Like Go Big, RaiseCapital.com and FundingUniverse.com are designed for small companies seeking a cash infusion. Prosper.com focuses on individuals looking for money. WSJ.com talked with Mr. Schroter about what works and what doesn't for business owners using his service and how he funded his start-ups.

WSJ: Paint a picture of the typical investor on gobignetwork.com.

Mr. Schroter: The average investor on the site is a wealthy individual. They probably have as much investment capital as an angel investor, but our investor is more likely someone who has a full-time job, but also wants to place an investment in a start-up or film or what have you.

WSJ: There are 10,000 active listings on the site, and it seems most are companies looking for funding. What's the best way to stand out?

Mr. Schroter: There are 99 companies looking for funding for every investor. The best postings are short ads that are really to the point. Four sentences that are well-composed will beat four paragraphs every time. It should say: "This is the industry we're serving. This is the problem we're solving. And this is how we make money doing it."

A bad posting doesn't give any indication to the investor why they would want to invest in that company. It's: "We want to create a great company. We need more money. Invest in us." Instead, they should say: "We're going to be in the health-care industry. We found a cure for cancer. We're going to sell cancer pills for a dollar and make 90 cents on each one." An investor gets that.

WSJ: How often do companies find funding through the site?

Mr. Schroter: We don't have a way to track that. But when the average person posts, they receive three responses. There are 10,000 active listings – including people looking for funding and people looking to fund. People need to be in it for the long haul. You're not shopping for a mortgage – you're talking about a highly-specific fit.

WSJ: How did you fund your first business?

Mr. Schroter: I was 19. I talked to a couple of venture-capital companies and they laughed at me -- my projections didn't go past one year, and I had left things out like the cost of health benefits for employees. After three years, I had about $100,000 in debt -- a combination of credit cards and personal loans.

WSJ: How did you fund your most recent company, Go Big?

Mr. Schroter: Over time, I realized that sometimes you don't really need to raise money, but to convince people to do things for you, like build a Web site. I launched Go Big with less than $50,000. I brought together lots of people who were willing to participate [in exchange for] for stock. I employ 12 people, and they all have options in the company.

People should also pitch everyone all the time. I was in San Francisco last week, and every single person I ran into, I pitched my business. You never know, they might say, "Oh, my best friend happens to be a Java programmer." (Source : Yahoo finance)