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Great Idea, but no way to get funding yet

Te1280Te1280 subscriber Posts: 1
edited December 2007 in Startup Funding
I am opening a business  that runs around 60% net annual profit of the initial investment, theoretically.  I have poor credit, no capital and no collateral.  The banks won`t lend me money and investors are shy because it is in retail.  Help.  I need roughly $500K to do this. Any suggestions/ interest?  I have run the books for concrete company that generates about 3million in revenue per year.  So, I`m not new at this business thing I just never started my own business.
 
Trent
Te128012/7/2007 2:30 PM
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Comments

  • robertjrobertj subscriber Posts: 0 Member
    Trent,
    Generally speaking, investors look at the quality of the plan and the probability that the "team" will be able to execute it.
     
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  • Te1280Te1280 subscriber Posts: 1
    so how do I get infront of those investors so I can convince them? 
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  • robertjrobertj subscriber Posts: 0 Member
    Introductions from "trusted" sources usually work far better than the "cold approach" method. robertj2007-12-7 15:55:7
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  • Te1280Te1280 subscriber Posts: 1
    i understand what you are saying the problem is I don`t know of anyone who knows angel investors
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  • robertjrobertj subscriber Posts: 0 Member
    Most of our client`s say the same thing when they come to us. So we coach them on our system that begins with Building your constituency.
     Also, since investors are not a "homogeneous" group. we suggest developing an investor profile for your situation and offer. 
     
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  • divettedivette subscriber Posts: 0
    I have the same situation with credit however I`m looking for a much smaller loan or investment ($25-30,000) who should I be asking?
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  • robertjrobertj subscriber Posts: 0 Member
    divette,
    It`s not just who - but how and when you approach them.
    By when I mean - when you & the business are capital ready.
    How includes the "language" you use when to communicate with potential investors.
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  • entreplanetentreplanet subscriber Posts: 3
    Typically, investors like to see an exit plan. They usually aren`t interested in dividends, rather, a sale of your company or an IPO, where they can make back a huge lump of cash for your investment. This may be a good thing to write into your business plan
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  • robertjrobertj subscriber Posts: 0 Member
    Venture capital firms (by their very nature) have a time line on each fund and therefore need an exit strategy for every investment. Since most "professional" angels expect the VC firms to be involved in future rounds - they want to ensure that the companies they invest in have an exit plan. Because of the dollar amount involved this "exit" usually has to be either going public or being acquired.
     
    In the private investment community, we are seeing more acceptance of other "creative" liquidity strategies.
     
     
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  • Te1280Te1280 subscriber Posts: 1
    okay, i have an exit strategy in place for potenial investors.  It is a 6 year strategy that will average out to be roughly 25-30% return per year.  Again, I still run into the same problem of no angels investors to present this to.  How do I go about fix this situation or find investors?
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  • robertjrobertj subscriber Posts: 0 Member
    Ask yourself - would you invest in this deal?  Not as the owner/operator but as an investor.
     
    Without knowing details, the simplest exit is the "cash out"event via sale or public offering. Typically the company does not pay dividends during the "growth" period leading up to the EVENT so the deal translates into:  You (the investor) put up $500K today. At 25% per year, you would get back 3.81 times your investment or  just over $1.9 million after 6 years.
     
    As an investor - is your perception of the risk involved commensurate with the possible return?
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  • Te1280Te1280 subscriber Posts: 1
    well, maybe I am being a bit nieve, but generally speaking it takes one roughly 6 years  to double their money and that is investing primarily in stocks that can average 12% over the 6 year period.  Any initial down years also make the requirement for the average return to be higher, due to the loss of principal, to double your money in 6 years........  Yes, this carries an inherently higher risk but the return is also almost 300% more than you general investment with the slightly above average stock market risk to generate the appropriate returns................................  So, the short answer is yes I do feel it is commensurate with the amount of risk taken, but again that is my opinion and may or may not be the opinion of the investor.
    Te128012/10/2007 2:53 PM
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  • Te1280Te1280 subscriber Posts: 1
    What are your thoughts?
    Te128012/10/2007 2:51 PM
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  • robertjrobertj subscriber Posts: 0 Member
    When comparing the risks of a new business and the stock market, remember the liquidity factor. (you can sell stocks at any time while there is zero liquidity in a start-up)
    You also need to address the "perceived" risks. (for example - the ability of the "team" to execute the plan as well as the "strength" of the plan) How would you rate yours?
    robertj12/10/2007 3:25 PM
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  • johnqhjohnqh subscriber Posts: 4
    Te1280,
    Remember investors also invest in the person (founder), not just the product.
    Ask yourself - would you invest in someone who has bad credit, with no money, and seems who doesn`t understand investment in general?
    If you (or anyone) want to get investment, the number one thing is to make yourself "turstworthy". Get your credit score up. Get your own finances in order. Have some savings - so you can tell investors "I am putting my own savings into this venture".
    Otherwise, you have no chance to get any investment.
    Just being honest.johnqh2007-12-10 16:27:28
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