Raising money for a startup company or small business is never easy, and in the credit-crunch era, it's especially challenging. Since we're starting a new round of fundraising to finance the expansion of NewWest.Net, I've been thinking a lot about this topic, and I've got a few tips to share.

In the technology and Internet businesses especially, when people think of raising money, they generally think of venture capitalists. But even though there are many hundreds of venture-capital firms with many billions of dollars at their disposal, the types of companies that interest VCs represent a tiny minority of all new businesses, and they have to fit a few very specific criteria.

Most importantly, there has to be the promise of a huge payoff in the event of success—at least 10 times the initial investment (which itself generally has to be north of $1 million for it to be worth a VC's trouble) in a five-to-seven-year time frame. This, in turn, requires two things: a "scalable" business model and an exit strategy.

The first means that you can take your initial concept and make it huge, either by reaching a single, very large global market (e.g., Facebook or Twitter) or by replicating a proven model in many different markets (e.g., Whole Foods (WFMI) or Yelp). The second means that you have a plan for how the investors are going to get their money back.

Most smart entrepreneurs can spin a story about scalability, but I'd think twice before going down this road. Conquering the world is a tough business, and once you raise money on that promise, you no longer have the choice of remaining more modest in your ambitions (and maybe more realistic about your company's potential).

The exit strategy also poses an odd paradox. There are really only two types of exits for a venture-backed company: an initial public stock offering or a sale/merger. IPOs are tough to pull off even in the best of times, and at present, they are almost impossible: Only a handful of companies have managed it over the last 18 months. That leaves a sale—but if you say upfront you're starting the company in order to sell it, your religious commitment to the venture could be in question.