Raising Capital for an Expensive New Venture

[Sean Haddad]

Hey all, I have a question for you successful entrepreneurs: When starting a new business venture that requires a lot of capital to get started, how do you raise that money? Do you invest in it yourself? Crowdfund?

Backstory: me and 2 of my cousins had an idea for a service that would be sold as a subscription to businesses in order to get them more engaged customers. Creating the MVP required $100k. Considering my partners were still in school and living at home, they could not afford this. We spent a long time convincing a business owner in our family to invest (he's very old school, doesn't understand tech). Almost literally the day after convincing him, he finds out another big and established company is doing something similar. So he backs out.

Over the next year, we went through various sources but no dice. Now, I am at a point where in order to proceed with an idea, which I believe is still viable, I would have to invest in it myself with my own money.

I question whether it's a smart thing to do, but the potential for success is great. I'm not looking for advice or suggestions really, just some personal accounts of people who have had this experience before.

Thanks

 

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[ZCP]

You want someone to invest in your company / MVP, yet you have reservations of doing so??

There is no way to come up with an MVP that costs less than $100k??

I'm out!

 

[theag]

We spent a long time convincing a business owner in our family to invest (he's very old school, doesn't understand tech). Almost literally the day after convincing him, he finds out another big and established company is doing something similar. So he backs out.

Good for him.

 

[Vigilante]

Hey all, I have a question for you successful entrepreneurs: When starting a new business venture that requires a lot of capital to get started, how do you raise that money? Do you invest in it yourself? Crowdfund?

Backstory: me and 2 of my cousins had an idea for a service that would be sold as a subscription to businesses in order to get them more engaged customers. Creating the MVP required $100k. Considering my partners were still in school and living at home, they could not afford this. We spent a long time convincing a business owner in our family to invest (he's very old school, doesn't understand tech). Almost literally the day after convincing him, he finds out another big and established company is doing something similar. So he backs out.

Over the next year, we went through various sources but no dice. Now, I am at a point where in order to proceed with an idea, which I believe is still viable, I would have to invest in it myself with my own money.

I question whether it's a smart thing to do, but the potential for success is great. I'm not looking for advice or suggestions really, just some personal accounts of people who have had this experience before.

Thanks

No investor wants to invest in something you don't believe enough in to invest your own money in. Nor should they. Nor should you ask them to. Try and self fund it until you can prove it viable. Don't risk other people's money unless you're willing to risk (and potentially lose) your own. ESPECIALLY family and friends.

 

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[Raoul Duke]

Sweat equity.

 

[Vigilante]

Almost literally the day after convincing him, he finds out another big and established company is doing something similar. So he backs out.

Did you

A. know and not tell him about it or

B. not know what your bigger competitors were doing?

Not sure which answer reflects better (or more poorly) on you. Did you withhold the info, or not know it?

If you have a new value proposition against an existing, larger competitor... that needs to be part of future discussions with potential investors.

 

[MJ DeMarco]

When starting a new business venture that requires a lot of capital to get started, how do you raise that money?

Have a track record of execution, if not a product, customers, abilities, executive management, SOMETHING. Pipe dreams don't win term sheets.

 

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[AllenCrawley]

Over the next year, we went through various sources but no dice. Now, I am at a point where in order to proceed with an idea, which I believe is still viable, I would have to invest in it myself with my own money.

There you go.

 

[tux]

Please help us understand why you need 100k for your MVP. Are you building a rocket? MVP should not be that expensive unless you are offering a product of enormous value. MVP is suppose to test the business idea to ensure its viability.

If you really want to pursue this idea either sweat equity or your own funding is needed. You can't have one foot on the line and one off and expect others to have both feet in. Prove yourself to others and others will stand by you.

 

[AgainstAllOdds]

The rule in Silicon Valley is that it takes 3 months on average to raise funding. So go out there, sleep on a couch, and try to get investors. If you don't get funding in 3 months, heck, even 5 months, then chances are that your business was never viable.

This is only assuming that funding is necessary.

 

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[NetBorn]

Hey all, I have a question for you successful entrepreneurs: When starting a new business venture that requires a lot of capital to get started, how do you raise that money? Do you invest in it yourself? Crowdfund?

Backstory: me and 2 of my cousins had an idea for a service that would be sold as a subscription to businesses in order to get them more engaged customers. Creating the MVP required $100k. Considering my partners were still in school and living at home, they could not afford this. We spent a long time convincing a business owner in our family to invest (he's very old school, doesn't understand tech). Almost literally the day after convincing him, he finds out another big and established company is doing something similar. So he backs out.

Over the next year, we went through various sources but no dice. Now, I am at a point where in order to proceed with an idea, which I believe is still viable, I would have to invest in it myself with my own money.

I question whether it's a smart thing to do, but the potential for success is great. I'm not looking for advice or suggestions really, just some personal accounts of people who have had this experience before.

Thanks

Sometimes it's better not to have the money : ) .

Well only option you have is to contact adviser ( what was the name ), but not long ago for similarly expensive idea I contacted a guy I know - he raised 25 million pounds for basically eCommerce ( I personally don't see how that would bring returns, but anyway) . So asked him on advice, how these days to raise that capital ( I think you can generalize and say put a presentation or make POC , it is more complex and it changes each year ) ? He said don't give away equity it'll haunt you ... since he's now advising many boards, he takes 1000 pounds a day for advising on this ... didn't pay him, but it's the only easy idea that comes to my mind - such people know how to sell ideas and raise money, I'm sure those 1000 pounds would pay.

Otherwise - read ! Read some core business books, read this forum, be open to criticism and grow up
Then be ready for execution and meanwhile develop any professional skills that you have - if you are developer, don't stay in one place "develop" yourself, try to read more books on that subject and become good, change work place more often, get better salary and better position, have money in your pocket and you'll have the confidence and knowledge to build that startup. Otherwise you may not even have time or even physical, mental energy.

 

[Guest34764]

What a big waste of time,Can't even thank one post in this thread.

[HASHTAG]#Landfill[/HASHTAG]

 

[NetBorn]

What a big waste of time,Can't even thank one post in this thread.

[HASHTAG]#Landfill[/HASHTAG]

Yes, there must be always a way, nothing is impossible ... we are not good enough YET and that's totally acceptable.
P.S.
Oh, forgot the getto 50th law ... priceless, don't think what you really want, but have no fear because deep inside your a child that have many fears ... priceless

 

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[Sean Haddad]

Did you

A. know and not tell him about it or

B. not know what your bigger competitors were doing?

Not sure which answer reflects better (or more poorly) on you. Did you withhold the info, or not know it?

If you have a new value proposition against an existing, larger competitor... that needs to be part of future discussions with potential investors.

We did not know it. They were kind of "testing the waters" so to speak, so they had just started doing it. No withholding of information.

 

[Sean Haddad]

Please help us understand why you need 100k for your MVP. Are you building a rocket? MVP should not be that expensive unless you are offering a product of enormous value. MVP is suppose to test the business idea to ensure its viability.

If you really want to pursue this idea either sweat equity or your own funding is needed. You can't have one foot on the line and one off and expect others to have both feet in. Prove yourself to others and others will stand by you.

It's a very ambitious project. We were quoted an average of $80k for building the application with front end/back end + $10k for maintenance/software updates. I threw in the extra $10k for contingency. It's possible to drop features even further to create something very bare bones, but I don't want to do that and end up with something that doesn't provide much value to the customer. The MVP of $100k provides the most valuable and attractive features.

 

[Andy Black]

What a big waste of time,Can't even thank one post in this thread.

[HASHTAG]#Landfill[/HASHTAG]

Why? What did you want to hear?


Personally, I would like to thank everyone who took the time to contribute their thoughts, wisdom, and insights to this thread ... especially busy business owners operating at levels well above me - who don't need to drop breadcrumbs for me to follow - but still do.

Thank you!



You have to give to receive.

Start by giving thanks.

Give thanks.

It's one of THE best things you can give.

It means you have to give people attention.

It means you've shown them you've given them attention.

It forces you to observe what's going on around you. Without this power of observation, it's very hard to have empathy, and very hard to not put yourself first.



Good things will happen, just from giving thanks.

Trust me... this is one of my biggest learnings from two years on this forum: the power of giving thanks.

 

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[JoeB]

Why? What did you want to hear?


Personally, I would like to thank everyone who took the time to contribute their thoughts, wisdom, and insights to this thread ... especially busy business owners operating at levels well above me - who don't need to drop breadcrumbs for me to follow - but still do.

Thank you!



You have to give to receive.

Start by giving thanks.

Give thanks.

It's one of THE best things you can give.

It means you have to give people attention.

It means you've shown them you've given them attention.

It forces you to observe what's going on around you. Without this power of observation, it's very hard to have empathy, and very hard to not put yourself first.



Good things will happen, just from giving thanks.

Trust me... this is one of my biggest learnings from two years on this forum: the power of giving thanks.

Your posts are getting as succinct as your videos ;-)

 

[Andy Black]

Your posts are getting as succinct as your videos ;-)

Wow. Good call with the bolding. I didn't spot that.



Yeah, I feel I'm rambling less, although do like a good ramble.

Distilled wisdom comes from taking action, observing the results, then... err... distilling.

Wisdom is earned... by TAKING ACTION.

The people to listen to have learned by doing, not by reading. Their responses stand out a mile.


EDIT: succinct is a great compliment btw. Thanks!

 

[InformationH]

My thoughts without knowing about your project, how much money you have, and what you've already tried to do is the following. This is what I would do if I was in your position.

- Get Customers First
- If you have customers investors are more likely to have faith in your business as will as in you. You could also try crowdfunding if that works with your business model. You also will have more faith in your own plan to take the risk yourself and you will know there is a need for your business.
- Leave Family Out Of It
- I personally try to avoid working with or for family members. I also avoid taking money from family or lending it at all costs but that's up to everyone to decide for themselves. Too much drama in my opinion.
- Switch Business Plans?
- "Over the next year, we went through various sources but no dice." I don't know what other progress you've had in your preparation for your business but if you only have an idea and have not made any other progress it may be time to switch business ideas.
- The Potential For Succes Is Great in Many Ideas
- If this business plan is something you really want to do then my suggestion is fund it yourself through other income. Find a business idea that you can get going in a months time. Focus on this business and make it grow. Then use these profits to fund your other business venture.

 

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[TonyStark]

Sweat equity.

The only kind I believe in.

 

[ejames]

Hey all, I have a question for you successful entrepreneurs: When starting a new business venture that requires a lot of capital to get started, how do you raise that money? Do you invest in it yourself? Crowdfund?

Backstory: me and 2 of my cousins had an idea for a service that would be sold as a subscription to businesses in order to get them more engaged customers. Creating the MVP required $100k. Considering my partners were still in school and living at home, they could not afford this. We spent a long time convincing a business owner in our family to invest (he's very old school, doesn't understand tech). Almost literally the day after convincing him, he finds out another big and established company is doing something similar. So he backs out.

Over the next year, we went through various sources but no dice. Now, I am at a point where in order to proceed with an idea, which I believe is still viable, I would have to invest in it myself with my own money.

I question whether it's a smart thing to do, but the potential for success is great. I'm not looking for advice or suggestions really, just some personal accounts of people who have had this experience before.

Thanks

If you believe in it bank roll it yourself.

Thats basically what I am doing.

 

[biophase]

I would have to invest in it myself with my own money.

I think this is still the big question. Why didn't you invest your own money?

 

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[ZCP]

@JScott Hear where you are coming from. In this case, sounded like the OP said they had reservations..... as if it wasn't a good idea. That is completely different than an owner choosing to not invest their own funds. Why present something that you don't think is a good idea and will payoff to an investor? You have to create value for them just like a customer.

 

[SteveO]

What a big waste of time,Can't even thank one post in this thread.

I see a lot of good advice in this thread. There is no easy way to get money. It takes work, time, past results and (gasp) MONEY to raise money.

Certified financials and a due-diligence package on yourself will help. These are very expensive and will show your past and present strengths/weaknesses.

I have raised a few million. It took a lot of money to do so.

There may be some ways around this with friends/family. But you must be connected. Crowd funding is also an option but there is a lot of competition out there.

 

[Guest34764]

I see a lot of good advice in this thread

I was talking about OP not using the thank or like button.I think you misunderstood it.

 

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