Finance for my new venture

I need finance for my new venture

[paru12]

Hi, I have been a regular member of WebmasterWorld since years and have learnt much from the forum and now is the time for financial gains.

I have a fruitful idea that I know is going to pay me well off 'coz nobody owns such a website, atleast I think so 'coz my claim backs handy research work, and I desperately want some money, around US $25000, to start with it. Can some one suggest me how to start with it?

I would prefer not to disclose the idea and would be thankful to all the replies.

Many thanks!

[andye]

Hi paru12,

You've really got two choices, debt or equity:

1) Debt. You're willing to take the risk that you'll lose the money - you make a personal guarantee (i.e. secured over your own assets) to the bank or credit card company, and they give you the money without caring at all about the business (because if it fails they'll be able to chase you personally for the money). This isn't an approach I'd recommend.

2) Equity. This is where you incorporate the business, and sell a percentage of the ownership (i.e. some shares) to an investor, in return for them investing their money. They'll be looking for a business which can be sold within a few years, giving them back a lot more money than they put in.

Individuals who invest the kind of amount you're talking about are known as 'angel investors', a good place to start would be your local angel network (i.e. group of angel investors), you should be able to find them pretty easily. You'll need to have a decent business plan to present to them, in order to stand any chance of getting investment.

Hope that helps.

best, a.

[andye]

PS: Another option - and I know this doesn't really answer your question - is not to raise the money at all, or at least not that much.

US$25k is a relatively large sum for a web project, I'd say - unless you're doing something really unusual.

You could start with a smaller investment of money, in getting things going to a state where you have some kind of product ready to sell to customers (even if it's not the full product that you envisage selling in the end) and grow the business on those revenues.

This is known as 'bootstrapping', Google for that term and you'll get lots more info...

hth, a.

[LifeinAsia]

Another issue with equity is that you are basically selling part of your business and losing some control over it. The people coming in with their money want to make sure that they maximize the return on their investment. So many will demand 51% ownership/control and the direction they feel the company should go may be different from your own.

Now, there are also plenty of angel investors that are more willing to be passive and let you keep control, especially for such a small amount of money.

Just make sure which type it is BEFORE you get into bed with them.