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Ross Smith was in a quandary.
Last year he was helping launch a 3-D graphics company.
He needed additional capital, but since Quantum3D Inc. wasn't a dot-com, venture capitalist weren't exactly knocking down his door to fund the startup.
"We weren't an Internet company so we couldn't get much interest from a VC, and we needed about $10 million, which is too small for a mezzanine round from an investment bank," said Mr. Smith, vice president of marketing for the San Josebased company that makes 3-D graphics for video games and simulation training.
Quantum3D received some early venture money from Chase Ventures, Charter Ventures and others. But what Mr. Smith learned is that in the Internet age, there are other ways to skin the capital cat, as well as a number of fundamentals every entrepreneur should know before embarking on a capital hunt.
He read a magazine article about a new type of online investment bank, San Francisco-based Off-road Capital, which uses the Internet to raise capital investments in private stock offerings for pre-IPO companies.
"We sent an e-mail and got an e-mail back the same day," Mr. Smith said. "Four months later we did a deal."
For regulatory purposes, Offroad is an investment bank, but it likes to think of itself more like a private capital marketplace-a facilitator that matches individuals with pre-IPO startups. The matching is done via the Internet.
Traditionally individuals have been excluded from investing in privately held startups, the domain of venture capital firms and their large institutional investors.
Offroad...