Anyone here tried to raise one million plus in financing for a startup?

[weich]

I'm looking for roughly 1.1 to 1.4 million to start a new business. I have two basic options: debt financing or equity financing. They both have positives and negatives.

The debt financing seems like a better option to me, as it will allow me to control 100% of the business. I ran through a business loan calculator which estimated current medium term loan interest rates at 14.5%. I'm not sure if that is accurate, but that would put my monthly loan payment between 20K and 30K, which is certainly a daunting number on paper.

However, I think it's much better to face those steep payments than it is to give a way a sizable chunk of the company and do equity financing.

Has anyone here tried to get financing of this magnitude? Did you succeed or fail? Do you have any tips for getting the money?

 

[sub_thug]

Trying to raise $1.1-1.4M?

 

[weich]

Trying to raise $1.1-1.4M?

I'm definitely not in the "I have 1.1 to 1.4 million to throw at a new venture" phase of my life. I wish I could have won the birth lottery.

 

[sub_thug]

In all seriousness, my buddy went through Series A funding for his start-up. He didn't get everything that he was hoping for, but he took out a few loans to make up the difference. He tried to go into a few more rounds, but the interest wasn't really there. He's doing okay, not great, but he is slowing working himself out from under his debt. He ended up having to go the equity financing route. Honestly, if you want an angel investor, that's the way that you're going to have to do it. And for the kind of money that you're talking about, you are going to need some serious investment capital.

 

[panamaican]

I've helped small businesses raise the money through private placement offerings. We've have had mixed success raising the capital and it's entirely dependent on how much trust people have in your ability to deliver. It's also expensive since there are more regulatory issues to manage, particularly if you're raising money in more than one state.

Debt financing is fine but if you don't have existing revenues to show, getting the money via a traditional lender is going to be an uphill issue.

 

[weich]

I've helped small businesses raise the money through private placement offerings. We've have had mixed success raising the capital and it's entirely dependent on how much trust people have in your ability to deliver. It's also expensive since there are more regulatory issues to manage, particularly if you're raising money in more than one state.

Debt financing is fine but if you don't have existing revenues to show, getting the money via a traditional lender is going to be an uphill issue.

Getting this money is going to be an uphill battle no matter what. I'm attempting to open a medical marijuana business which seriously limits my options already. The only good news is that Colorado revised it's laws regarding financing for marijuana businesses so I have slightly more options than I did a year ago.

 

[Anung Un Rama]

I'm looking for roughly 1.1 to 1.4 million to start a new business. I have two basic options: debt financing or equity financing. They both have positives and negatives.

The debt financing seems like a better option to me, as it will allow me to control 100% of the business. I ran through a business loan calculator which estimated current medium term loan interest rates at 14.5%. I'm not sure if that is accurate, but that would put my monthly loan payment between 20K and 30K, which is certainly a daunting number on paper.

However, I think it's much better to face those steep payments than it is to give a way a sizable chunk of the company and do equity financing.

Has anyone here tried to get financing of this magnitude? Did you succeed or fail? Do you have any tips for getting the money?

Depending on what city you're in, there are angel investor groups. The benefit of these groups, if they like your idea, is money AND support. These people have been there and want you to succeed. This is the way you want to go if you can. I'm assuming if you need that kind of start up money then your idea is valuable enough that if you dole out some pieces of the pie, you will still make good money while maintaining control.

I started a company that was a loved concept by investors and our pro-bono advisors alike, but we stated right as the financial collapse began so we had issues raising the money we needed, which was the primary and secondary reason we failed. If I could impart any advice it would be to get the money you need before you commit to anything. Everything else (money and wisdom) I would lean on angel investors for.

 

[AGGAMEMNON66]

This is Sherdog bud, we're all already millionaires

 

[panamaican]

Getting this money is going to be an uphill battle no matter what. I'm attempting to open a medical marijuana business which seriously limits my options already. The only good news is that Colorado revised it's laws regarding financing for marijuana businesses so I have slightly more options than I did a year ago.

Have you considered raising it via private lenders with loans that convert to equity if not paid off within a certain stretch of time?

 

[weich]

Have you considered raising it via private lenders with loans that convert to equity if not paid off within a certain stretch of time?

I wasn't even positive that option existed, but that sounds like a plausible idea.

Perhaps this is a stupid question, but is it possible to write some sort of equity financing where I can buy back some, or all, of the shares at an agreed upon time and/or rate? I can't find any information on that.

 

[panamaican]

I wasn't even positive that option existed, but that sounds like a plausible idea.

Perhaps this is a stupid question, but is it possible to write some sort of equity financing where I can buy back some, or all, of the shares at an agreed upon time and/or rate? I can't find any information on that.

Yes. But if you're raising capital via share issuance as opposed to predetermined partners contributing start up funds, you're going to have to deal with securities law. At that point, I would recommend getting a lawyer with some experience. PM for some general conversation on the matter.

 

[weich]

Yes. But if you're raising capital via share issuance as opposed to predetermined partners contributing start up funds, you're going to have to deal with securities law. At that point, I would recommend getting a lawyer with some experience. PM for some general conversation on the matter.

Thanks for the tips. I'll shoot you a PM this afternoon.

 

[Higus]

I'm looking for roughly 1.1 to 1.4 million to start a new business. I have two basic options: debt financing or equity financing. They both have positives and negatives.

The debt financing seems like a better option to me, as it will allow me to control 100% of the business. I ran through a business loan calculator which estimated current medium term loan interest rates at 14.5%. I'm not sure if that is accurate, but that would put my monthly loan payment between 20K and 30K, which is certainly a daunting number on paper.

However, I think it's much better to face those steep payments than it is to give a way a sizable chunk of the company and do equity financing.

Has anyone here tried to get financing of this magnitude? Did you succeed or fail? Do you have any tips for getting the money?

Typically your financing model depends on your business model. Are you planning a business that should make returns quickly? A restaurant, for instance. Debt financing could be a better option. If you are planning a business that will take a while to make profits, like a software startup, equity financing is a better way to go.

 

[cmw43]

Damn $30k a month in loan repayments sounds like a lot of stress.

 

[Higus]

Getting this money is going to be an uphill battle no matter what. I'm attempting to open a medical marijuana business which seriously limits my options already. The only good news is that Colorado revised it's laws regarding financing for marijuana businesses so I have slightly more options than I did a year ago.

Do you have any experience in this field? There are a lot of challenges to the industry.
Get a good lawyer before shopping around for investors.

 

[weich]

Do you have any experience in this field? There are a lot of challenges to the industry.
Get a good lawyer before shopping around for investors.

Yes, I've been in the industry since it was formally started in July 2010.

 

[Organic Damage]

Why don't you want to do equity? Do you really have a lot of valuable IP to protect in a medical marijuana startup?

Excuse my ignorance, it's about to be legalized up here and I have pretty much zero business savvy, just curious...

 

[weich]

Why don't you want to do equity? Do you really have a lot of valuable IP to protect in a medical marijuana startup?

Excuse my ignorance, it's about to be legalized up here and I have pretty much zero business savvy, just curious...

It seems to be a more expensive way of raising the money.

The approximately 500K in interest I would pay(based on the calculator I used) pales in comparison to the amount I would have to pay an equity investor.

 

[TribalDrumz]

Why is California herb still better than co?

 

[CerebralKnievel]

A buddy of mine in the neighborhood did manage to secure... I suppose it was equity funding... For his tech startup. I don't really know about the details, but basically it was his initial concept, he partnered with some guys he knew who had a little more experience in the field of business startup and financing and they set up the pitch to the financiers. So the end result is that he's now like.... VP of something and sits on the board of directors, but he isn't technically the company head.