Where can i get capital / an investor??

[c4l]

Hi guys.

Had another potential start-up idea.

Done the maths and i think that it would work.

However, it's quite capital-intensive.

I reckon to get the idea off the ground I would need nearly £80k.

Bear with me though!!

of this £80k, £72.5k would be on depreciating assets required to get things going.

After 6 months, of this £72.5k, I reckon I could sell off the assets easily and get back £60k; after 12 months £55k.

So not as bad as it first looked.

Any ideas as to who would lend me £80k though!!?!

With a good business plan, would a bank??

[Cornish Steve]

Done the maths and i think that it would work.
For something that is capital-intensive, your analysis must be thorough enough to prove it will work under a variety of different conditions. To simply say that you think it will work is not enough.

[Hedgehog Toys]

hmmm.. you would need a really good business case and some of your own capital for a bank to look halfway serious :? :?

[cjd]

A bank, or anyone, would want some of you 'skin' in it plus a guarantee against the loan.

If you have no track record, team or money and nothing but some numbers and an idea you're wasting your time.

You could try producing a thorough-going business case and trecking round the Venture Capitalists looking for start-up funding from one who specialises in your field.

Normally though you need to find cash from 'family, friends and fools' to provide proof of concept before any professional outfit will talk to you seriously.

You can find VCs here along with advice about how to make a business case.

http://www.bvca.co.uk/index.html

[thekitchendesigner]

www.zopa.com might be of use for a part of it.

I havent used it but have seen and considered it for future use

[Ian J]

Small Firms Loan Guarantee may be one option for you

[c4l]

Hi guys, cheers for responses.

Re-looked at the plan as £100k does seem ambitious.

Im quite sure it could be done with just £10k now - smaller scale than I had planned.

Anyone know of any smaller scale investors?? All those on BVCA seem £50k minimum.

[cjd]

If your idea qualifies you might try this

http://www.nesta.org.uk/insidenesta/

[cqueen]

What would the bank say if he had 15% of the capital upfront from customer orders? and then gaurenteed custom for the next 12 months?

[Cornish Steve]

What would the bank say if he had 15% of the capital upfront from customer orders? and then gaurenteed custom for the next 12 months?
If I was the investor, I'd expect to see a convincing story about that so-called 'guaranteed custom'. Are the numbers justified? What is the break-even point? What is the expected return on investment? Have all scenarios been considered?

Investors are willing to accept reasonable risk in return for a high return on their investment. The greater the risk, the higher the return must be. If the risk is too great or not well understood, then no investment.

[cqueen]

what do you consider a high return?
Would a bank not lend at the usual 6%?

[Cornish Steve]

what do you consider a high return?
Would a bank not lend at the usual 6%?
Investors are in business to make money. Let's say you are looking for a £1,000 investment and that your business case reveals two possible outcomes:

1) There's a 90% chance that the investor will receive money back with interest.
2) There's a 10% chance that the investor will never see her money again.

The investor could put her money in a bank account and earn 4%, say. In this scenario, there is no risk at all. To be willing to accept the possibility of losing everything, the investor will demand a higher rate of return - let's say 16%.

- There's a 90% chance of earning a 16% return.
- There's a 10% chance of losing everything (-100%).

(0.9 x 16%) + (0.1 x -100%) = 4.4%. In other words, for a 16% return, this opportunity may be better than putting money in the bank. For a 15% return, however, it's better not to invest.

Obviously, this is not a realistic example, but investors must balance required rate of return with perceived risk.

[theMBA]

Hi guys.

Had another potential start-up idea.

Done the maths and i think that it would work.

However, it's quite capital-intensive.

I reckon to get the idea off the ground I would need nearly £80k.

Bear with me though!!

of this £80k, £72.5k would be on depreciating assets required to get things going.

After 6 months, of this £72.5k, I reckon I could sell off the assets easily and get back £60k; after 12 months £55k.

So not as bad as it first looked.

Any ideas as to who would lend me £80k though!!?!

With a good business plan, would a bank??

C4L - You could look for a Business Angel. Particularly useful if you want to find someone who might take a close interest in your venture in the longer term so that it isn't just a six-month wonder.

[cqueen]

okay but lets just talk about banks, how much will a bank charge for a relitivley large business loan as a %?

[c4l]

Business Angel??

Where do I find one of them??

[Cornish Steve]

okay but lets just talk about banks, how much will a bank charge for a relitivley large business loan as a %?
Sorry to sound vague again, but it depends.

1) How much risk is involved?
2) Is the loan secured, e.g., using home equity?
3) What does your credit history look like?
4) Can capital equipment be used to secure part of the loan?
5) How much have you invested personally from other sources?

[cqueen]

Ok, say the business needed £450,000 to start :D .
On which £375,000 was going on relativley liquid assets, but do indeed depreciate about 10% per year.
saying the business had £70,000 up front of customers advance orders money, along with additional income of £420,000 P/A (gaurenteed by signed agreement).
So, total business loan of £380,000 over 3 years, secured on assets with gaurenteed income. Do you think they would be up for it?

[amcphillips]

Yep at 10% interest but not through a local branch of a certain bank! :wink: