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I'd set it up on a contractual basis: 5 year deal, 15-25% gross profit on first $xx.xx, 25-30% on second $xx.xx etc. -- here is where you 'pay' as you receive nothing if they don't make money off the site -- and throw in a clause about a benefits package.
The way it works is a 1 year deal max to get it off the ground, then with the expectation to either become a director or set up a new company or part company if it fails. During year 1 a non-refundable retainer is paid each month against future commission (not based on hours/effort but enough to keep it focussed)
You're generous. My pitch takes 20, well, ok, maybe 30 minutes. ;)
That's a presentation ;)
How do I deliver a winning elevator pitch?
Here’s what one expert told us:
1st sentence: State the Problem
2nd sentence: State your solution
3rd sentence: Who you are, why you’re the one to solve the problem
3rd sentence: State the value proposition
4th sentence: Call to action (what the audience or recipient should do next)
>> you are working with their brand and so must bend to their will
In the market space I'm targeting it's not so. These are smaller businesses that have very little brand equity.
>> prosper.com / virginmoney.com
I've thought about them too. I need to check out the rates.
I'm not really interested in selling any portion of ownership to fund this venture. I'd like a loan or loans to help but I don't want an unknown personality owning a portion of my company. Partly because I don't want that feeling of owing someone an explanation of my decisions and partly because I don't want to lose any control - I know this particular market extremely well. That's not to say I won't listen to outside advice - in fact I welcome it. Your thoughts and advice have been taken to heart and I need to follow through on them. My preferences to fund this venture are:
A) pay for it on my own
B) pay for it through a handful of loans from people I know
C) pay for it through a grant or loan from a bank
D) pay for it through an Angel
>> incrediBILL's advice
I know exactly what you mean. It will take me a bit of time to turn all of the advice into actions. Thanks all.
Whilst it would be nice to have $$$k to pay you a salary and hence food, rent, beer, etc. not having it is a thousand times the motivation to make the project work. This is a real problem with investment funding (i.e. the dot.com bubble - firms were flush with investment funding but well paid staff didn't worry night and day about profit). It is less of a problem with a personal loan or a business loan secured against your personal property.
Re: elevator pitches... although buildings have got a lot higher recently, elevators now accelerate faster leaving you with less time than would otherwise be the case. Not only that, the cars are larger and have more other people in them. Literally and metaphorically.
Sometimes, forcing yourself to develop that one-line explanation can give you insights into your basic strategy that you didn't have before.
Consider emulating the entertainment industry, where the summary pitch can be as simple as, "it's My Fair Lady meets James Bond, and we've lined up Madonna and Johnny Depp." Obviously, the long pitch gets into the details, but you want to be able to leave a single quick concept in the mind of potential backers.
For a business elevator pitch, a sentence about how the concept is different from what exists now and the barrier to imitation is good idea. "Others do it, but I'm better" isn't appealing to investors. Serious barriers to entry like patents are, though most new Web-related businesses don't have that option."Nobody has done it, and it will take imitators 24 months to get up to speed," might work. A powerful domain name could be a plus for a Web venture.
"Developing an elevator pitch" has 214,000 results at Google...
I'm not quite sure how to take that henry0. I've been in business for a number of years and know how to both write and use business and strategic plans. The fundamental question I sought answers too had more to do with how to fund an online venture that has little in the way of equity - especially given the current economic crisis here in the US.
If you are looking to get the funds in the next few months, I'd say the Angels or the SBA will be better choices; maybe even the only options given some of your requirements/preferences.
A powerful domain name could be a plus for a Web venture.
Real-estate, even theoretical real-estate like a URL, is "tangible" and understood by investors in a way other parts of your idea may not be. I should think that the URL could be a powerful tool in an elevator pitch. As rogerd suggests with the Hollywood approach, you can imply much of your plan, and thus shorten the pitch, with a good name (anyone think there would be a musical number filled with happy people in Terminator? What about Buy.com, any confusion about what the intentions of that website?).
A lighter note: Just call your local House Rep. and mention you need an earmark for $100k on the bailout bill. No one will notice your line item amongst the other $700 billion :o)
The SBA guys most of the time require that you, even knowledgeable and experienced, to follow a course, it's quite mandatory.
Sorry, this is incorrect.
If you have a reputable lender, they will prepare all of the documentation for you. As I stated earlier, my previous occupation was as an SBA lender for the 3 largest lenders in the country.
Also, I have borrowed twice from the SBA to start my current company.
A good lender will send a business development or loan officer out to gather the info, a loan officer will review the documentation, a loan packager will complete the necessary docs, the borrower will review and sign the docs, the SBA will approve the loan (or in the case of a preferred lender known as a PLP, they will approve it internally) and the funds will be made available.
Don't forget there's a difference between a "business idea" and a "great idea/invention " that can be turned into a business. Both require to be a t different stages to attract interest.
Here's my take , but there's a myriad of alternate strategies :
The self start approach , working to a good plan which has meausurements of sustainabilty growth , time and values. :
Stage 1 [ Funding between $100k and $1m ]
-Self fund prototype through organic or personal methods
-Prove concept [ earns , can scale , is defensible therefore sustainable etc ]
-Introduce potential early stage investors [ relatives / friends / beneficiary business ]
-Build early stage plans [ keep documentation simple for portability ]
-Pitch growth milestones which add value
-Decide at which milestone you require funding
-I suggest that this approach take your busines to a value of at least $2-5 million on a multiple of net earnings around 8-10 times.
Stage 2 [ Funding $300k - $1.5m ]
- [ Prepare for a 15-20% sell down of equity to raise cash ]
- Typically Angel investors per incrediBILL's notes above.
- Most of these folks don't really want to be involved in less than $300k - it's not worth their time
- I don't believe in this quick elevator pitch unless you've just invented the cure for all ailments.
Why ? because all the audience wants is to understand the business concept & have confidence in it. There are many ways in being precise and communicating. Be visual , keep these folks interested at a distance through stage 1 , expose them briefly to progress.
During stage 2 you may want to pay for some professional assistance to prepare you for stage 3 and use them as your conduit for communicating to the next level.
Always keep your plans simple. A CEO of a global icon did some work with me years ago and he insisted of having no more than a 10 page summary biz plan. He was regularily across successful fund raises with big business houses. However, his reputation carried a lot more weight than the paper he often presented - having persons with reputation alongside you can help greatly , no matter at what level of business you are at.
Stage 3 VC's - enough has been written about this, but expect a lot of paperwork , diversion from your business. Above all make sure that you are in a sustainable position as a stakeholder with some retainable value in the business
Since there are no rules , many will disagree or have a different approach , but above all, do what works for you. There is plenty of money available for good ideas based on good plans - always is - always will be.
Bingo. I think this is the key to wooing a bank or other entity willing to provide a loan. I just need to define the appropriate starting point that will prove the concept sufficiently - which I guess would be for $$$$$ in, the business generated %%%% profit in one/two years. Then with appropriate self-reflection and adjustments to the business plan, I could go after a larger amount to jump to the next level. Having a track record helps enormously.