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Start Up Funding

joycopejoycope subscriber Posts: 2
edited February 2007 in Growth Funding
 
I have a new, patented invention with a huge market.  I have used all available personal capital and am ready to find funding in the $500,000 range for production and marketing and sales.  I have no equity in my home/farm. 
I met a "broker" yesterday who assured me she could find money for me.  She wanted $5,000 to start the business relationship, another $10,000 later with the assurance she would have investors, and she wants 10 percent of the investment.    I am very leary of this; is she a scam artist? Or is this common in the money-brokering world.
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    bertbert subscriber Posts: 12
    This is not uncommon.  There are a lot of people willing to take your money to "try" to get you funding.  They have nothing to lose with the deal you stated here!  So you need to make sure this one has a track record of success before laying out the cash.  Ask for references and check them out.
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    ujeansujeans subscriber Posts: 1
    I would *never* give money up-front to someone who claims they can find you funds. If they find you the money, they should take their cut from the proceeds.
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    joycopejoycope subscriber Posts: 2
    I appreciate your response, as well as the others I received.  After a year of fumbling around "learning" my business, I know input from others who have had some business experience, but don`t want anything from me, is very valuable.
     
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    stevesteve subscriber Posts: 14
    I have a new,
    patented invention with a huge market.  I have used all
    available personal capital and am ready to find funding in the $500,000
    range for production and marketing and sales.  I have no equity in
    my home/farm. Have you considered licensing your invention to an established company in the same or a related field?

    They assume the responsibility for production, marketing, sales, fulfillment, etc. You get a cut of the profit.
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    joycopejoycope subscriber Posts: 2
    Steve,
    I have often heard that this is a way to lose your product, even though you have a patent.  Has anyone out there done this sort of thing?
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    robertjrobertj subscriber Posts: 0 Member

     
    I have a new, patented invention with a huge market.  I have used all available personal capital and am ready to find funding in the $500,000 range for production and marketing and sales.  I have no equity in my home/farm. 
    I met a "broker" yesterday who assured me she could find money for me.  She wanted $5,000 to start the business relationship, another $10,000 later with the assurance she would have investors, and she wants 10 percent of the investment.    I am very leary of this; is she a scam artist? Or is this common in the money-brokering world.

    A couple of comments:
    1. Based upon years of experience working with entrepreneurs in early stage businesses, YOU (not your plan or idea or patent) will be the single most important ingredient in securing funds. Investors will want to "look you in the eye" before they write a check.
    2. Anyone who receives a "success fee" (10% of the investment) MUST be a registered securities broker-dealer.
    3. Sinice you are not a public company - anyone who "makes an offer of securities" must either be licensed (above) or be an officer of the company.
    The bottom line is - it is virtually impossible for a 3rd party to secure funds for a startup situation.
    You would be far better served to engage with someone who can teach, guide and support you in the process of securing the investment.
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