Getting funding

[Scott-CopyandDesign]

Hi people,

So I have a good idea for a Website which I'm currently refining and developing. I personally believe with a bit of time and work it could become a good success and create revenue from Premium accounts (£1 per month) and Advertisement revenue.

Now the problem is funding. To get this website developed including overheads and marketing it could come to around £15,000. No matter how good this idea is I think since I'm 16 it throws my chance of getting that kinda money out of the window (or so I asume).

So unless anyone has any ideas about that I can only forsee one option which is to offer a share of equity to someone who is a web designer as a partnership (not a joint partnership). Then they can develop the website to my specifications while I handle the business and marketing.

Does anyone have any opinions as to whether this could be viable or any other ideas?

Thanks,

[fastfences]

Hi Scott.
It seems you'll need someone to offer 100% equity which is a long shot. It would need to be a truly fantastic prospect for someone to subscribe to that.

Many of us 'launched' with cash from credit cards, though I acknowledge your age is against you for that. Can you get any coin from family? That seems your only option at pres.
Cheers, Nigel

[cjd]

Only friends, family and fools will give you that sort of cash and accept having no control over the business.

Given you age, your only other option is a DIY site that you can use as a prototype and market test - if you can prove a market you have more chance of raising more money later.

[bmedia]

Is this idea UK or global, Is it 100% original? Who done your costings?

[Scott-CopyandDesign]

Is this idea UK or global, Is it 100% original? Who done your costings?

It's global. The idea is based on an already known concept but very unique in it's changes. It also isnt intended to be used in place of the more well-known websites but in unison with them. I did my costings.

[bmedia]

Can you tell us what market its in, who is the current biggest player and I can give you an honest opinion if £15k would be enough.

[Carl-CSNM]

Is this the MySpace idea you had?

[Scott-CopyandDesign]

Can you tell us what market its in, who is the current biggest player and I can give you an honest opinion if £15k would be enough.

The biggest player would more then likely be Myspace. Although it's a heavy competitor because of the unique aspect they could be used in unison. I also had an idea of developing an applet which integrates into someones Myspace page to show off what they have on their webpage in our website. It wouldn't be a competitor in the sense of direct competition over users, actually I think the presence of Myspace would help expand the membership base more then anything else.

I've looked into it more and £15,000 isn't accurate (it was just an estimate). I was quoted about £10,000 to get a website designed of this caliber, I want to spend at least £1,000 on an SEO, about £1,000 in start-up marketing, £200 start-up hosting, £200 overheads and around £5,000 in cash assets to pay for a long-term marketing campaign and to maintain the website until break-even is reached and it becomes self supportive through advertising revenue and premium accounts.

[bmedia]

When you want to start playing with myspace £15k is not a lot of cash, you will find your idea will be copied in days and someone with a big userbase will eat you up

Have you thought of getting a partner who is already established on myspace and has a big userbase of their products?

[Scott-CopyandDesign]

When you want to start playing with myspace £15k is not a lot of cash, you will find your idea will be copied in days and someone with a big userbase will eat you up

Have you thought of getting a partner who is already established on myspace and has a big userbase of their products?

What do you mean by someone with a big userbase? A big userbase in what exactly?

To be honest I think £15,000 is adiquite to be a serious investment. No one is going to plow that kind of money into a large development project unless they are seriously devoted. And if they want to become another Myspace competitor they can go right ahead. That's just business and it can't be helped.

[Miss Meerkat]

Hi Scott,

I'm not sure I agree with your last comment. £15k is not a lot of money for medium to large businesses, and spending that amount of money would probably not be classed as a "large development project". This is especially so if you're thinking of entering the realms of Myspace and the Murdoch empire.

good luck
lex

[Scott-CopyandDesign]

Hi Scott,

I'm not sure I agree with your last comment. £15k is not a lot of money for medium to large businesses, and spending that amount of money would probably not be classed as a "large development project". This is especially so if you're thinking of entering the realms of Myspace and the Murdoch empire.

good luck
lex

What I was trying to say is there will probably only be a rival to this idea if there is serious thought about the development. No average person is going to throw £15,000 into an idea, ecspecially when it's copied and there is therefore a 100% direct competitor.

But I do agree it isn't a large amount in terms of this kind of development. But for Myspace to copy the idea they would have to pretty much revamp their entire webpage system.

[Shay]

Not sure what age the Princes Trust start at but where ever you go you will need a cast iron business plan with forecasts and quotes that are about XYZ won't help you, you will need to get some definitive quotes and accurate costs etc. I know a couple of web people who have been known to take on a project and work out a payment scheme which may or may not involve a slice of the cake if its of any help.

As for the £15k being an investment????? I spoke to Simon Woodroffe (Prev Dragons Den) and an investment of 20k to him was minor, so if its the man in the pub yes 15k is a serious figure anyone else in business, possibly peanuts.

[DuaneJackson]

IIRC, PT only support age 18+ on their business program.

£15k is pocket change for most investors, and trust me, it wont last very long.

What stops someone else copying your idea once it is in the public domain and throwing a lot more money and expertise at it?

[DuaneJackson]

No average person is going to throw £15,000 into an idea, ecspecially when it's copied and there is therefore a 100% direct competitor.


They will if there's money to be made.

[Scott-CopyandDesign]

Nothing stops someone coming in and doing the same thing. But if that's the case then what am I supposed to do? If I get every idea turned down because it can be copied by someone with more money it's going to be physically impossible to ever start a business since being 16 I'm never going to get large amounts of funding.

Sure I could ask for £1,000,000 and plow the majority of it into marketing to become a serious player against competitors but it's never going to happen. The only choice I would have would be to keep it within a small realm as long as possible until I get some premium members (£1 per month) or advertisement revenue. Thankfully my college has over 16,000 students. Combining other colleges, schools and Universities in my area that's about 50,000 students, small percentage of that amount would do nicely.

I know it's far, FAR from perfect but I can't really do anything better, it's either that or nothing.

[Shay]

Its not that anyone is saying don't do an idea that can be copied but you have to look at it from an investors point of view. Take Dragons Den as an example, for the most part if a good idea is patented it stands a better chance than one that doesn't, if you get your funding from family then they may not be as strict with regards the copy side of things but investors will and you in this case have to give them something a bit more to chew on before they release any funds.

As for no to a joint partnership...why not? If you are only after a small percentage of the 50,000 students in your area then something would be better than nothing wouldn't it? being 16 has nothing to do with why no funding, the basis has to be the viability of the idea. Colonel Sanders was 90 odd beofre he got KFC up and running, so use your energy for you instead of bleating on about being 16 and asking for advice but not listening to it.

Apologies if that sounds harsh but that appears to be the one thing which lets you down as you are on the right track the rest of they way, it would be a shame for your attitude (because I am 16) to let you down especially when some peers would be expecting it to be the case.

[DuaneJackson]

Not every idea can be copied - that's what patents are for.

They're hardly worth bothering with for software based ideas within the EU, but there are other things you can do to cover your butt though - exclusivity deals with key partners, etc. Or a secret ingredient.

Even being first to market can be a big boost as it has been with KashFlow.

Ditto on the age/violin stuff. If you decide your age is an issue, it will be. If you decide it doesn't matter too much, it wont.

Nothing stops someone coming in and doing the same thing. But if that's the case then what am I supposed to do? If I get every idea turned down because it can be copied by someone with more money it's going to be physically impossible to ever start a business since being 16 I'm never going to get large amounts of funding.

Sure I could ask for £1,000,000 and plow the majority of it into marketing to become a serious player against competitors but it's never going to happen. The only choice I would have would be to keep it within a small realm as long as possible until I get some premium members (£1 per month) or advertisement revenue. Thankfully my college has over 16,000 students. Combining other colleges, schools and Universities in my area that's about 50,000 students, small percentage of that amount would do nicely.

I know it's far, FAR from perfect but I can't really do anything better, it's either that or nothing.

[Scott-CopyandDesign]

As for no to a joint partnership...why not? If you are only after a small percentage of the 50,000 students in your area then something would be better than nothing wouldn't it? being 16 has nothing to do with why no funding, the basis has to be the viability of the idea. Colonel Sanders was 90 odd beofre he got KFC up and running, so use your energy for you instead of bleating on about being 16 and asking for advice but not listening to it.

Apologies if that sounds harsh but that appears to be the one thing which lets you down as you are on the right track the rest of they way, it would be a shame for your attitude (because I am 16) to let you down especially when some peers would be expecting it to be the case.

I've approached 5 or 6 full-time businessmen and investors. Every single one said "it's a good idea but your age and lack of experience lets you down", one of them is even from this forum, thats why you could say I'm so bitter about it. And to be honest I understand it where they are coming from.

I know hundreds of teenagers my age who say they want their own business and they can do this and that but at least from my personal experience when I get down in-depth with the ones I know none of them have a clue (about the stuff they say they do), maybe some minor knowledge but nothing close to being comfortable in knowing finance etc. So someone could come up to an investor but without any qualifications or proven experience they have no solid proof as to what they can do.

As for joint partnership I'd rather not have 50/50 ownership when it ecspecially comes to decision making. Unless the two people are very alike and both work hard I can just imagine disputes arising at some point. Of course this is just my preference, if someone came to me offering £15,000 for a joint partnership I'd accept it but obviously it wouldn't be idealistic.

I also must add I am taking every piece of advise on-board. I'm just replying in cases where I've thought about it and why I thought against it so the idea can be worked on. You never know someone on here might come up with my ideal solution.

[cjd]

I really don't think there's much point worrying about getting £15,000 because if your family can't help you no one else will.....that's just a fact of life.

You might think about how to make a demonstration or prototype of what you are doing - that at least would give you something to show people, would cost very little and get you started.

btw, don't use the 'I only need a small % of a big number' argument when you talk to investors - it's one of the sins of of business cases; it's an arithmetic trick that tells you nothing useful about the market and your ability to reach it - and it shows naivety.

[Scott-CopyandDesign]

I really don't think there's much point worrying about getting £15,000 because if your family can't help you no one else will.....that's just a fact of life.

You might think about how to make a demonstration or prototype of what you are doing - that at least would give you something to show people, would cost very little and get you started.

btw, don't use the 'I only need a small % of a big number' argument when you talk to investors - it's one of the sins of of business cases; it's an arithmetic trick that tells you nothing useful about the market and your ability to reach it - and it shows naivety.

Good idea actually. I'll probably try and get a demonstration together when I've finished my Business plan and getting quotations, probably just a brief design of how I want the page to look since it's the key difference in my idea compared to websites like Myspace.

And about the percentage thing, I sort of get confused about the psychology behind it. If I say theres 50,000 students available I expect someone to say 'it's very unlikely you will get anywhere near 50,000. So I look more naive when I try to make myself seem more 'in the know'.

Oh and thanks for all the advice so far from everybody.

[DuaneJackson]

If you get a chance, post a proper breakdown of what the 15k would be spent on. Perhaps someone reading would be able to provide some of the services you need at less than you epect - or if a big chunk is made up from one thing then perhaps someone might be interested in equity in return for the work.

I will gladly give you free hosting and database space if it helps. This isn't cheap $10 a month hosting. Our clients pay £340 a year for it.

[fastfences]

I'll gladly offer you a front fence so you can keep all the generous people like Duane as bay!

But being as serious as I can be, great offer, Duane!!
Cheeers, Nigel

[Scott-CopyandDesign]

If you get a chance, post a proper breakdown of what the 15k would be spent on. Perhaps someone reading would be able to provide some of the services you need at less than you epect - or if a big chunk is made up from one thing then perhaps someone might be interested in equity in return for the work.

I will gladly give you free hosting and database space if it helps. This isn't cheap $10 a month hosting. Our clients pay £340 a year for it.

Thanks Duane that would be really helpful.

Here are my rough start-up costs so far using some quotes I've gotten from people. I still have to work out how much finance I may need for legal costs such as documentation and agreements as well as Liability insurance if I need it. I'm definatly expecting requirements to rise.

Start-up Expenses
Legal costs
Website Design £10,000
Insurance £0
Search engine Optimization £1,000
Marketing and Advertisement £1,000 (pre-launch marketing)
Website hosting and maintenence £200 (pre-launch setup)
Overheads £200
Total Start-up Expenses £12,400

Start-up Assets
Cash Required £5,000
(For hosting costs and marketing until break-even.)
Total Requirements £17,400

[DuaneJackson]

How many quotes have you had on the web design? That's very epensive - does it involve a lot of development too? I'm sure that could be reduced somewhat.

How is this being marketed and who to? Consumers? (ie, joe public) If so, could there perhaps be a cheaper route to market such as a partnership with another company that already has an offering with which yours has some synergy?

[Scott-CopyandDesign]

How many quotes have you had on the web design? That's very epensive - does it involve a lot of development too? I'm sure that could be reduced somewhat.

How is this being marketed and who to? Consumers? (ie, joe public) If so, could there perhaps be a cheaper route to market such as a partnership with another company that already has an offering with which yours has some synergy?

Just a few quotes, one from someone on this forum. When it comes to a website like Myspace the development does get extremely complicated, I was expecting something around £10,000 before I even got the quote. I could possibly get cheaper deals but I'd rather get a good balance between cost efficiency and quality.

It's being marketed to the public as well as businesses and music bands etc (like businesses and bands use Myspace to advertise and get new clients).

[JustOneUK]

I also have a similar idea derived from the myspace model, however likewise it would cost a lot to set up... so i am waiting for the myspace script to be available for free download instead and then will get someone to tweak the code :D

BTW: anyone seen a decent myspace script available for free yet?

James.

[bmedia]

What you need to do is get a partner who has a team of designers, seo experts and media contacts and go 50/50 on this project. Once this product takes off then people will show you more respect and you will have people offering money all day long

In myspace land I know guys getting paid $5k a week to promote stuff so you need to think long and hard about your budget

[Scott-CopyandDesign]

What you need to do is get a partner who has a team of designers, seo experts and media contacts and go 50/50 on this project. Once this product takes off then people will show you more respect and you will have people offering money all day long

In myspace land I know guys getting paid $5k a week to promote stuff so you need to think long and hard about your budget
It's a possibility.

Myspace is just absolutely collosal. 80,000,000 users and apparently theres 230,000 new signups per day. I'm not surprised people get paid $5,000, it's certainly effective. As for me I would definatly have more realistic targets considering my budget and knowledge, still have to work it out however.

I was thinking about maybe approaching my College and seeing if they are interested in giving grant money (a friend of mine is setting up a circus toy class and he's been given £2,000) or maybe even investing for a share of equity. I know Universities have done this in the past but I'm not sure about Colleges.

[Shay]

Would it be possible on the web design front to get a site up but aloowing for other parst of it to be introduced as and when you grow? that way your web cost comes down and then only grows as per your signups?

[Scott-CopyandDesign]

Would it be possible on the web design front to get a site up but aloowing for other parst of it to be introduced as and when you grow? that way your web cost comes down and then only grows as per your signups?

The problem is even the core infrastructure is very complicated. I could probably cut costs though by introducing things like the messaging system and customizable profiles at a later date. It's definatly something to consider but unless I get the money I need or somehow get design work for free/cheaper anyway then that's probably the route I'll have to take.

[garyk]

yep agree with Shay, dont spend thousands and end up with something that offers form over function, surely you can get the technical stuff done and just plug in some css later to pretty things up. In fact even if you had a rough and ready prototype you are more likely to attract funding because at least there is something visible rather than just an idea.

I think you at least need to prove concept first and take it from there.

Gary

[PeteA]

We can provide funding to the small business market.

[garyk]

here you go a quick search and found 73 community website type scripts http://www.hotscripts.com/search/11948893.html