By Stephen Watkins For NewsUSA

(NewsUSA) - Q: We've got a product that sells well, but we need capital. How do I start?

- Larry N., San Francisco

A: Not having much information about what you need and where you are in the process, I'll begin by saying that it's important to understand there are different forms of capital with different costs associated with them.

I'll assume your company has a track record and operational history and that you've exhausted all commercial banking and debt issuances to support your growth. Banks focus on asset-backed loans, which can be personal or business Assets. If available, this is cheap money compared to the equity investors will want.

But, having experienced over-leverage in a company, let me suggest that debt should be used for operating cash, not growth cash.

If you are indeed focused on growth capital, let me start by suggesting that it is all about exposure. Investors need to understand what you have done and where you are going. The majority of capital falls into two categories: angels, usually wealthy community-based individuals taking "flyers" on local businesses; and venture capitalists, who invest for a living.

Angels need to hear your story and see a summary of your plan and will usually make an investment on that basis. They know that the story will change, and they typically have faith in the management team they meet through the investment process.

The venture capitalist sees many deals, and the screening process is unmerciful. You need to create a summary and start working on an "elevator pitch"-a 30- to 60-second summary of the who, what and why of your business.

Having a good written summary and elevator pitch gets the process together. It helps to sharpen your understanding and align your thoughts. The rationale for a summary is that angels rarely read your whole plan, because a plan itself never gets the deal done.

You'll find angels at various community-based angel fairs. These events are often held by chambers, business networking groups and various professional organizations. At the upper end of these, you'll also find VCs. You'll probably need an introduction, so whip out your Rolodex and start calling friends who can help you out. Once you're introduced, get the summary in their direction and follow up with a call.

Once you find interested parties, you will need to get in front of them with a credible story. So practice, practice, practice. If you can't communicate your story quickly and concisely, don't waste your time and theirs. Practice with a video camera, practice with friends, and keep practicing.

In the end, you'll find that for the person who takes an interest in your company, it came down to the credibility of yourself and your presentations. That, and your company's exposure to the financial audience.

Stephen Watkins is the chief executive officer of Entrex. He can be contacted at swatkins@entrex.net.