Venture Capital?

[HappyScrappy]

Has anyone here had any experience with starting their own business - esp anyone that did so through venture captial?

just curious on hearing about the experience, the pros, the cons (esp the cons), and how hard it was - in the past and then today.

anyone?

 

[WODIN]

I had two coke dealers put up five grand for my first series of porno's. Thank God I found Vixenbabe is all I got to say. That girl saved more than my digits.

I can hook ya up with them if you like.

 

[naturally anabolic]

i have started my own business however i haven't had exprience with venture capitol...

 

[Steroid_Virgin]

People in the business refer to them as Vulture Capitalists... For good reason.. stay the fuck away from em.

 

[beastboy]

I have my own business, but I also have no exp. with V.C..... If you want any info on my experience, let me know...

 

[SofaGeorge]

Has anyone here had any experience with starting their own business - esp anyone that did so through venture captial?

just curious on hearing about the experience, the pros, the cons (esp the cons), and how hard it was - in the past and then today.

anyone?

Scrappy, I do this all the time. I have been retired for about 5 years, but I started working projects again this year. I've just started working projects again this year. VC money is definitely tighter post the .com melt down; however, it is still very possible to raise fund for good projects. (I've gotten three small companies funded this year - one with a 10 million LOC, one with 2 million cash and a 3 million LOC, and one solely on 3 million in purchase orders for them to establish their LOC.)

The big mistakes most people make is they think a good idea equals a fundable company. It does not. I have the hottest product in the world sitting on my desk right now. It will see 200 million in sales in the next two years... but only after the company that invented it goes bankrupt. Why? Because the CEO of the company is incompetent and no VC would put money behind that kind of idiot. However, once he is bankrupt there are already offers to buy the rights to the project out from under him. It's a sad situation... but it underscores the first and most important thing that VC looks for - MANAGEMENT THAT CAN EXECUTE A BUSINESS PLAN.

VC will invest in a knock off Q-tip if you can show a P&L (Profit and Loss sheet) that demonstrates an attractive margin of return and a management team that has experience executing their business models successfully. VC is investing. It is NOT gambling... especially now after so many .com burns.

The biggest problem you will face is that fact that you have not worked with VC capital before. You will need an extremely well thought out business plan to show how you will manufacture, market, advertise, fulfill, etc... and why your management team can complete this business model.

Often for "risk" projects we go to well healed private investors rather than VC groups. If you have a track record with a private investor it is much easier to get a thumbs up based on 5-6 past success stories with that client.

The sad part of dealing with VC is what we call the "middle man fakers." Many supposed VC are actually brokers. They don't have the investment capital but they will pass themselves off as the actual investors... then they will take your business plan and shop it around... either hoping to get a percentage of the real VC's deal or to find someone interested in ripping you off out right. (Every successful product I have ever had has been knocked off within one month.)

My first advice to you is get a good lawyer... one who is both experienced in contracts and working with VC... and preferably one who has extensive VC contacts.

My second bit of advice to you is get ready to be screwed. Greed is a terrible thing... and it makes people do really stupid short sighted things.

 

[HumorMe]

SofaGeorge.......damn good post!

I have talked with venture capitalists in the past but really I am very leary of them because of what SofaGeorge has stated. Greed is the underlying factor for basically all of these guys. I would personally stay away from them if you have other means of raising needed money. You might run across one person who isn't in it for the greed but that would be a longshot to say the least. Explore all avenues of financing before signing on with a VC. Again, good post SofaGeorge!

 

[HappyScrappy]

excellent - thank you SG.

I have a few good contacts right now and I am trying to get setup with a few more (I am finally really starting to appreciate the reasons to go to a top college).

I have heard that you are likely to get screwed out of lots of money in it - I don't really expect them to be like, here is the $5million - run wild with it and we just hope to get any of it back really. I see their perspective on it and I respect that.
the worst part is I really don't care about the money too much, I'd be sadly happy with just a relatively decent salary - I just have an idea right now that I can show will do well, but there is just no way in hell that I can raise the initial captial required to start it.
I know that the ideal way to start a company is small under your own resources, and then grow and take the money that you make as you grow and feed it back into the company. that way it is all your's.
but this is software, and the fact of the matter is that you need to be one of the first out, which means I need a team of people, which means I need more money than I currently have access to.

but seriously - thank you for the honest and open opinion on that.

 

[MattTheSkywalker]

Scrappy

I can help you out. I am part of management at the only startup to get funded in our sector last year. I can answer a lot of your questions.

If you're for real, (good plan and model) you won't have to deal with any of those "brokers". They're nobodies, and if you know your shit you can dismiss them outright. We never even bothered with them.

Wealthy private investors usually hire VCs and operate like a private investment bank, so dealing with them is the same shit.

I think SofaGeorge overstated the lawyer side of things. The lawyer only comes into play when you are drawing up the contract, which means someone has agreed to fund you.

Even then, the role of your attorney can be minimized; the VC's always seek to have the contract structured so that they can get their money out in the event of failure or bankruptcy. Attorneys will usually ask for a percentage of the company (small) and then bill all kinds of hours. You need to tightly focus their role.

If you need help email me.

Matt

 

[HappyScrappy]

matt, thanks - I'll likely be emailing you in a few.