Can a One-Person Business Raise Money From Investors?

Yes. Solo owners raise private capital regularly, usually $100,000 to $1 million from people who know them, and sometimes more. The catch is that a one-person business is, to an investor, a bet on one person, so you have to answer four things the owner of a 20-person company does not: what happens to their money if something happens to you, that the business is a real entity and not you personally, that the revenue is documented and repeatable, and how they get paid back by a company that may never be sold. A sole proprietorship cannot take investors at all; you form an LLC or corporation first.

By Joel Arberman, founder of Prepared to Raise · 17 companies taken public, 30+ private placements prepared · Published November 9, 2026

The sole-proprietor problem

If you operate as a sole proprietor or a single-member LLC taxed as a disregarded entity with no operating agreement, there is nothing for an investor to buy. Investors buy units or shares of a legal entity with governing documents that define their rights. Step one for any solo owner is a properly formed LLC or corporation with an operating agreement or bylaws, a bank account, clean separation of personal and business money, and a cap table that shows you own 100 percent today. If the company is not formed yet, here is how formation and the raise fit together.

What investors need to see from a solo owner

1. A key-person plan

The first question every investor thinks and few ask out loud: what if you get hit by a bus, burn out or quit? Answer it before they ask. Key-person life and disability insurance payable to the company, documented processes so someone could run the business for 90 days, a named backup (a contractor, a spouse with authority, an advisor), and a plan in the operating agreement for what happens to investors' units if you cannot continue. Owners who show up with this prepared look like operators; owners who have never thought about it look like a hobby.

2. Documented, repeatable revenue

A solo business often lives in the owner's head. Investors need it on paper: two to three years of financials that match your tax returns, a customer list with concentration (if one client is 60 percent of revenue, say so and explain it), contracts or recurring arrangements, and a pipeline. If revenue depends entirely on you personally delivering the service, be clear about how the money changes that, usually by funding the first hires.

3. A use of funds that builds beyond you

The strongest solo raises fund a transition from "one person who does the work" to "a company that delivers the work": a first employee or two, systems, a location, marketing that produces clients the owner does not personally know. Investors are far more comfortable funding that than funding your salary while you keep doing what you already do. How much should I raise covers sizing it.

4. A return that does not depend on a sale

A one-person service business rarely sells for a meaningful multiple. So the return has to come from the business: a preferred return paid from profits, distributions, or a buyback at a set multiple once the company reaches a target. Investors who understand this structure will back a solo owner; investors looking for an exit will not, and you should not try to convince them. How to show a return without selling the company.

Where the money comes from

For solo owners, almost always Pool 1: customers, former colleagues, people in the industry and family, raised under Rule 506(b) with no advertising. Your reputation is the asset, and the people who know your work are the investors who can price it. Expect to need a list of 100 or more names for a $250,000 to $500,000 raise. How to get investors for a small business and how to raise from people who know you.

Structures that work for solo raises

Preferred LLC units with a preferred return and buyback. Investors get paid first from profits at a stated rate, and you can buy them out at, say, 2 times their money once the business can afford it. Keeps control with you and gives investors a defined path.
Investor notes with a revenue share. Debt that pays a percentage of revenue until a multiple is reached. No dilution, clear math, and it suits a business with steady billings.
Common equity. Simplest to explain, hardest to justify without an exit. Usually a poor fit for a solo service business.

SAFE, note, loan or LLC units compares them. SAFEs, designed for venture startups, are generally a bad fit here because they only pay off at a priced round or a sale.

Should you raise, or borrow, or wait?

Many solo owners would be better served by a loan if the business is profitable, or by six more months of bootstrapping if it is not. The honest test: can you make loan payments today? If yes, compare the two. If the business is pre-revenue, read how to raise with no revenue yet, and recognize that your network is the only realistic source.

The compliance part does not shrink for small companies

A $150,000 raise from six people needs the same exemption, subscription agreement, governing-document changes, Form D and state notices as a $5 million raise. The documents are shorter; the obligations are not. What documents a compliant small round needs, and what the lawyer will and will not do.

Where to start

Form the entity properly, then follow the 90-day preparation plan. If you are weighing a small raise against a loan, read investors or a loan first. The Readiness Assessment gives a solo owner an outside read on whether the raise is realistic before you spend your contacts.

This article is general information for founders, not legal, tax or investment advice. Securities rules depend on your facts; confirm your plan with a securities lawyer before you accept money.

Your next step

Not ready to talk yet? Take the 2-minute quiz or get the free guide.

Take the 2-Minute Quiz Get the Free Guide