Angel/Venture Capital

[nocompanyguy]

Has anyone personally been funded through Angel investors or venture capitalists? I would like to hear how you did it.

[vangogh]

I funded everything myself. Can't claim to know much about Angel investors, but I would think they tend to invest in larger businesses where they think they'll see a return. How big is your business going to be and what kind of a return do you think you'll be able to give to an investor and in what time frame?

[nealrm]

Venture capitalist are going to want there pound of flesh for investing. If you are a small start-up expect credit card rates or higher. Have you look at a SBA loan?

[nocompanyguy]

I am a healthcare manager and I want to open a clinic. The startup funds are not really the problem. In my state, for a health clinic, you have to show that you have a large capital reserve in the bank in case you cannot meet your bills or they will not license you.

As for the return, the numbers say that the first year will only be about 100k return. By the end of year two, there should be a 500k return. Fifth year at well over 1 million.

As for loans, after speaking with SBA and those who work with them there really is no such thing as a startup loan. You just have to raise the money yourself. I thought I might get some info about angels/vc but it seems that they really only want companies that will bring in several millions. I guess I better get networking and raise equity that way!

[nealrm]

I suggest you go back and talk with someone else at the SBA office. We received our loan with the help of the SBA office.

Now the SBA does not provide the loan itself. They just guarantee a portion of the loan. This reduces the bank's exposure. Of course in todays economic environment the bank may not be making loans ever with SBA backing.

[nocompanyguy]

I appreciate the suggestion and I may go back and talk with someone else. However, the SBA told me that the banks make the rules. I called many of their preferred lenders in my state and they all require 3-5 years in business. When I spoke to the SBDC who works closely with the SBA they told me that the banks are generally not funding startups. They all require 3-5 years in business. The SBA loans seem to be used for growing businesses, not startup. I will take any advise though.

[Steve B]

That is consistent with what I remember being told about SBA loans. They are really bank loans where the SBA provides some sort of assurance for the bank. There was no possibility of a loan for me either. I was able to open a line of credit before I quit my real job and that provided a bit of a safety net - but, that was based strictly on personal credit.