Would like investors input / opinion / dialog

[Watchdog]

With all the available investment talk out there I'm not sure where to start. No local newspapers will allow us to share what we're doing. I'm sure they look at us as meaning to disrupt the coupon / daily deal industry. I'm not denying that there is a slight potential, but it's really just another option for businesses and consumers to take part in daily deals.

We're considering local investors for our start up but I'm not sure how to ask and what to expect or what our options are? any input would be appreciated.

How would I even begin to attract investors in operations, marketers, more programmers, funding through angel investors or VC, or an employee owned sales staff for those that want to put in some elbow grease.

I also understand the investor wants to have some control their investment - I'm OK with that, especially if they know the business - I'm OK with them wanting to place their own people in position to run an operation that helps grow their investment. I wouldn't expect anything less.

I tried to create a pitch but it's always to wordy and they say "you get 60 secs" to show me your idea is worth looking into.

I'm an idea man with hack experiences. My silent partner is a proficient programmer currently employed as well - I'm employed with great benefits and I'm not crazy to risk giving up in the beginning of this start up - but I will if necessary if things start to fall into place.

Because we both are employed and plan to stay employed we have been able to go from idea and table napkin business plan to a working system in place.

We have to offer, a great idea, a working model and working development site, a system to generate revenue - POS and for what it's worth a domain that fits the business, easy to remember, brand and only 8 characters for spelling.

[vangogh]

We have to offer, a great idea, a working model and working development site, a system to generate revenue

I think that statements suggests most of what you need to do. From the perspective of an investor they're giving you money now to get back more in the future. They'll want some evidence that shows them the risk is worthwhile.

One thing you said that would concern me if you approached me to invest is that neither you nor your partner are willing to give up your day jobs unless things fall into place. That sends the message that you aren't willing to take a risk on the business until there's no longer any risk. But you're asking me to risk my money. Why should I do that if you aren't willing to risk yours? I do understand why you and your partner want to hold onto the day jobs, but it could be a sticking point for some or even all investors.

I think a good way to start is by making some money with the site. Have proof that it does generate revenue and it should be easier to attract people to invest. You can probably start with family and friends at that point. Also if you keep things local at first you shouldn't really need a lot of money to make things work.

There's one more negative here that may require you to first make money with the site before you can get investors and that's the nature of the business. Daily deal coupon sites aren't exactly setting the stock market on fire. Most of the interest in these kind of sites is due to Groupon, which has been losing more money than it's been making. I think it's lost something like 60% of its value since the IPO. Investors may not want to jump into a similar business until one of them shows there's money to be made. So far that hasn't been the case. Another reason why your first step in the process might be to start small and make some money. Use the revenue to attract investors and expand.

[Watchdog]

Great response, thank you. However, if you read it correctly no one said we're not willing to give up our job. I referenced the risk of of giving up our job.

Its no secret that more start ups fail then make it. And i recently read that one shouldnt be to quick to give up employment. Until you have a least a hint that what you're doing will have half a chance to work.

We're not the typical daily deal and our business model and way to generate income does not even come close to the typical daily deal.
We're the only dailly deal service that the business owner will be able to login and add their deal and our main fee will be on each coupon distributed.

[MyITGuy]

I'm an idea man with hack experiences. My silent partner is a proficient programmer currently employed as well - I'm employed with great benefits and I'm not crazy to risk giving up in the beginning of this start up - but I will if necessary if things start to fall into place.

Because we both are employed and plan to stay employed we have been able to go from idea and table napkin business plan to a working system in place.


I read into this statement the same way vangogh did. If you cannot quit your jobs today to grow this venture further, then how could you expect an investor to take a risk that you yourselves are not willing to make?

I'd suggest working on your business as you have been to grow it to a point where you can quit your jobs. Once you're at this point then the VC's may look a bit more favorably on your business.

[MyITGuy]

We're not the typical daily deal and our business model and way to generate income does not even come close to the typical daily deal.
We're the only dailly deal service that the business owner will be able to login and add their deal and our main fee will be on each coupon distributed.

Just some thinking points, but how are you going to compete or set yourself apart from the likes of Groupon/Facebook/Amazon and the other major players?
You state that the business owners can login and add their own deals. Do you have procedures/methods to verify the business legitimacy to prevent fraud?
Along with the comment above, do you have a means to ensure that a deal is exclusive to that business type...or will it spur a price war? (Think two massage companies in the same city updating their own prices/coupons that are listed in order to "compete" with the other business).

On a personal note, the daily deal sites seem to be loosing their following. Deals are no longer targeted to the consumer (Amazon may be changing that based on an article I read today) which causes the consumer to lose interest in these sites when they constantly see the same types of deals. From a business perspective these "deals" are discounted so heavily in order to draw in new customers...but the end result is that these deals are not likely to generate a loyal customer as they are just looking for the next good deal. Meanwhile your taking a loss of 50% or so off your products, in addition to the commission that the deal sites are taking...and your loyal customers are now taking notice and expecting the same treatment or they go elsewhere.

So in short, does your business model change the perception that I and other owners have of these daily deal sites? If so, how?

Keep in mind, that the VC/Angels your looking to pitch to will likely have the very same questions.

[Watchdog]

Really great questions and thank you for the time to write up this communication, it's the best yet.


Just some thinking points, but how are you going to compete or set yourself apart from the likes of Groupon/Facebook/Amazon and the other major players?

We separate ourselves by allowing the business owner not only a place to login and create a coupon, but also the flexibility of the deal it's self. We are not the deal worth, 100 you pay 50 you save 50% and that's basically what you get on all the deals.

Input determines what's spelled out.
When the business owner goes to add their deal - it is simple and easy (being creative on the deal description might be a bit more work)

Input of 0.00 will display "See Deal" You can describe the deal below. It must be clear in the coupon terms as well.
Input of 0.01 to 0.99 will display percentage "Save 25% " (eg. 0.25 will be 25%, 0.27 will be 27% )
1.00 and up will display actual value in dollars and cents.

a couple example here
Actual Value: $60.00
With Coupon: Save 50%

There might not be one actual value, maybe it's several different products?
Actual Value: See Deal
With Coupon: Save 50%


Actual Value: $60.00
With Coupon: See Deal

Actual Value: $60.00
With Coupon: $50.00 (not 50 percent, yet a deal)




You state that the business owners can login and add their own deals. Do you have procedures/methods to verify the business legitimacy to prevent fraud?

Preventing fraud is less likely going to be a problem being that they are not paying for any services up front. But there will always be those that try, so if anything you gain a customer that may not be a member...it's up to you if you wish to verify their coupon - we give the businesses the tools to help, they have to use them.

Working on the verification process - but no one will be on the live site with out us talking to them, researching them a bit are they established? Are they a new business? A signed agreement to include guidelines.

The "About This Business" section is set up on our side and the business has no access to change this - so if they tell us they're a member of lets say "BBB " we'll verify this and place the link there.

All coupons can be validated also by both the guest/member and the business owner right on the front of the site. This coupon validation will tell you if the coupon even exist (coupon codes are all unique) if it has expired, if it's good or if the business takes the time to login and click on "redeemed" it will tell the one looking if the coupon has been redeemed.



do you have a means to ensure that a deal is exclusive to that business type...or will it spur a price war?

No, I don't want to get into all exclusive deals, but once the business "publishes the deal" there are only a couple edits that they can make. They can not make edits to the fine print, coupon details that is included on the coupon, they can not edit start time, end time or expiration dates. They can add coupon limits if they wish because they went fast?
(I'll elaborate on this more in the morning, but I see many deals and unique deals for different food types, buy something and get something)

It's fair to add (edit) that we will be offering "Todays Deal" that will be all on it's own and this deal gets sent out to all subscribers. We are currently building our subscription but we have a ways to go before we can send out those Todays Deals successfully.



So in short, does your business model change the perception that I and other owners have of these daily deal sites? If so, how?

I would hope so...

We're looking to have great deals, but also we're looking to have practical deals that not only are good for the consumer, but also leads for the businesses. With our set up and approach we're hoping to get even the little deals like "Free Desert" when you come in and buy an entree at regular price... login get the deal show the business if you have a smart phone...or print it out from your account or the coupon that has been sent to your email...


If you have any questions, I'll check back later. I have a Birthday Party to attend :)

[Watchdog]

'm employed with great benefits and I'm not crazy to risk giving up in the beginning of this start up - but I will if necessary if things start to fall into place.


No ones going to quit there day job. If I needed the money for a programmer to get to where were at becasue it's in the idea stage, that's a different thing. The money we would ask for if we do decide to want to go that route would be for operations and marketing.

If that were to happen and granted, then yes I'd quit - I have bills too. We already invested heavily and not asking for a free ride on an idea. Ours is happening.

:) I'll have to let a lawyer check my wording for now, because you both see something that isn't there. :)

But thanks for the feedback, it is appreciated.

[vangogh]

No ones going to quit there day job.

I completely understand that, however from an investor's point of view it raises questions. You're saying you'll quit the day job once you know the business idea will pan out. That sends the message you aren't 100% confident everything will pan out. As an investor I'm thinking if you're not sure then why should I be sure. Presumably the reason you're seeking funding is so you can hire a programmer in addition to using it for marketing and operation. Wouldn't employees fall under operations? As an investor I don't want to hear that you'll be spending 40 hours a week at the day job and getting the business I'm investing in going during whatever time is left.

That doesn't mean no one would invest. I'm just pointing out some very likely questions an investor would ask.

A few thoughts.

Could you bootstrap things in the beginning? Can you get the business going to the point where it's making money and you feel confident about moving to it full time? Then take investment to grow to the next level.

Are there people you know (friends, family, associates) that would be willing to invest. These people are more likely to invest in you and trust you'll get the business going. Maybe people you know could serve as the early round of financing just to get things going. It would be a step between bootstrapping and finding angel investing.

[Watchdog]

You can bleed job thing that to death :) I have an option also working 2n shift if need be. or part time for a plumber :)

We're already boot strapping it and moving forward. There is a chance we won't need any investors - but to grow at a rate that will keep up with the other sites we might have to look at our options if there are any out there.

Back to work. Thank you all for your time.

[phanio]

I won't tell you to quit your job - but will tell you to cut back your personal expenses and start using those savings to invest in your business. This will also show an investor that you have skin in the game and help reduce the amount of capital you might need.
You want local investors - that is easy - network. Get out there in you spare time (every bit of your spare time) and network. Go to your local chamber of commerce and get a list of their networking events - attend these events and just start talking to everyone. Also, you can go visit local CPAs, Lawyers, other professionals - these are usually the gatekeepers to local investors and if you can convince them they will then be willing to introduce you to investors - much better to be introduced then trying to cold call.
You can also join local civil groups and participate in the group. These groups (like rotary club) usually have the most prominent people of the community as members - once established in the group/club then network like crazy and talk to everyone. I have personally used this method to find investors in the past for myself and others - and believe you me - you will be surprised who might invest in your business - like having doctors invest or other business owners - even your potential competitors. You just have to get out there and hustle it. If you can't or won’t hustle - then you will never get an investment. Even if the person you are talking to can’t or won’t invest, ask them who they might know who can.
Lastly, look around your area or larger city that is near by and see if they have local investor forums, incubators or business accelerators - all of which can help you both in your startup and in finding funding.
Regarding your sales pitch – that is cop out that you can’t reduce it. If it is that complicated to describe quickly – then it is a bad business idea for you. Investors want to know what is in it for them. Get their attention in 30 seconds or less – that is the goal – to get their attention – then let them ask questions where you can explain the rest of it.
Also, if you think the newspaper is scared of your business idea – especially in the startup stage – you are mistaken – there is another reason they aren’t dealing with you.

[Watchdog]

I won't tell you to quit your job - but will tell you to cut back your personal expenses and start using those savings to invest in your business. This will also show an investor that you have skin in the game and help reduce the amount of capital you might need.
You want local investors - that is easy - network. Get out there in you spare time (every bit of your spare time) and network. Go to your local chamber of commerce and get a list of their networking events - attend these events and just start talking to everyone. Also, you can go visit local CPAs, Lawyers, other professionals - these are usually the gatekeepers to local investors and if you can convince them they will then be willing to introduce you to investors - much better to be introduced then trying to cold call.
You can also join local civil groups and participate in the group. These groups (like rotary club) usually have the most prominent people of the community as members - once established in the group/club then network like crazy and talk to everyone. I have personally used this method to find investors in the past for myself and others - and believe you me - you will be surprised who might invest in your business - like having doctors invest or other business owners - even your potential competitors. You just have to get out there and hustle it. If you can't or won’t hustle - then you will never get an investment. Even if the person you are talking to can’t or won’t invest, ask them who they might know who can.
Lastly, look around your area or larger city that is near by and see if they have local investor forums, incubators or business accelerators - all of which can help you both in your startup and in finding funding.
Regarding your sales pitch – that is cop out that you can’t reduce it. If it is that complicated to describe quickly – then it is a bad business idea for you. Investors want to know what is in it for them. Get their attention in 30 seconds or less – that is the goal – to get their attention – then let them ask questions where you can explain the rest of it.
Also, if you think the newspaper is scared of your business idea – especially in the startup stage – you are mistaken – there is another reason they aren’t dealing with you.

Thank you. You have made a lot of good points.