Investor Fell through!

[Faith28]

Oh dear! Well hey ho on we go.

A while back I had an investor who wanted to invest £20k at nominal rate for the business (20%). We agreed in principle and started developing the new game idea for the Collectible Card Game market.

In the mean time I was developing the plan to create the new game and working with the author of a new game. We're just about to exchange contracts with the author too.

However, the investor said he was unable to invest right now due to one of his other investments overseas suffering a collapse of some sort (I know the details).

He is still my business mentor and wants to be part of the work but needs to focus on sorting his other business and I can't wait for that really.

Does anyone know how to procure funding within a matter of days to a couple of weeks!!!

 

[Faith28]

As a last resort I'm going to consider taking out a business loan through HSBC with my home as collateral. Not something I considered before.

 

[Mister B]

What's the element of risk involved? If relatively low, then why not reap the rewards yourself and follow your plan to speak with HSBC?

Failing that, why not speak with Gillie. I'm sure that she'll give you a few pointers

Mister B

 

[Faith28]

It's the first game we're taking to the toy market.

I'm slightly risk averse and feel comfortable working with an investor.

I've got enough to invest the advance on royalty and then some of the illustrations for the starter packs. There will be booster packs as well later in the year. Plus the Toy Fair needs to be booked in May.

 

[LicensedToTrade]

Can you give a little more background on the project? How much other money is involved in addition to the £20,000? I wouldn't have deemed £20k to even be enough to cover the marketing budget of a product like this

 

[TotallySport]

it normally takes at least four weeks to sort out business loans, you would be quicker getting a personal loan.

 

[Faith28]

The marketing budget allocated comes to £9k.

And the total budgeted costs comes to approx. £30k.

I have spoken to one organisation that said their minimum orders are 5,000 units and that they have to see the game before they can confirm. Hence the seed budget, once we get these initial orders then we have a stronger position to expand.

Starter packs aim to retail at £9.99 at wholesale prices of £4 per pack. We'll be printing over 10k and only need two strong orders (at 5k) to create a self-sustaining project.

 

[LicensedToTrade]

The marketing budget allocated comes to £9k.

And the total budgeted costs comes to approx. £30k.

I have spoken to one organisation that said their minimum orders are 5,000 units and that they have to see the game before they can confirm. Hence the seed budget, once we get these initial orders then we have a stronger position to expand.

Starter packs aim to retail at £9.99 at wholesale prices of £4 per pack. We'll be printing over 10k and only need two strong orders (at 5k) to create a self-sustaining project.

My only concern (and you will obviously know much more about this than I do) is that this is a very competitive market and it is more than ever driven by demand. In some situations if you can get a product into a national chain then you are guarenteed strong sales (e.g. Mothercare) but with childrens trading cards they are often the value added by-product of a television series, movie or video game rather than a stand alone product.

Nevertheless I trust you have carried out all your research at this stage so I am covering old ground. If you need the £20k within a couple of week then you will be looking at personal or business loan from a bank. The interest rates will be high and timebound. Can you postpone the agreement at all or would this put you at risk of losing the deal altogether?

 

[Faith28]

The aim is to target the Toy Fair in January 2010.

We need to be on the ball now to get there.

There is a slight cashflow issue due to unpaid invoices which will hopefully be sorted in the next two weeks. So what I will do is start the mechanics of the game and at the same time procure the rest of it in stages.

And you are bang on the money with the spin off cartoon cards hence why we've included plans for a cartoon series in future for the game.

The card game is a first for the education market and even in the commercial market there are no or very little TCG games with an educational twist. Most are fictional characters with fictional powers. This ones uses something quite different by applying science to it.

 

[LicensedToTrade]

I see so time isn't on your side if you are to get your product on the go before the Toy Fair. I see your predicament. If you did manage to find an investor in the next couple of weeks I would see them trying to take advantage of your predicament (I know I would) and they will likely be expecting a greater share than 20%

 

[Faith28]

Unfortunately we cannot go higher than 20% due to the next stage of the project taking into account a larger chunk of investment for the expansion plan. There will not be enough equity to secure the larger chunk.

The idea is to firstly prove the concept and then show it's scaleability potential; cartoon, magazine, toy models and so on this needs procuring a larger investment of over £150,000.

The value of the original 20% will have increased quite substantially.

 

[BusinessIdeas]

The aim is to target the Toy Fair in January 2010.

Isnt it a bit late then?

 

[LicensedToTrade]

Can't believe I missed that! I'm guessing the OP means 2011?

 

[BusinessIdeas]

I dont miss much

 

[Faith28]

Can't believe I missed that! I'm guessing the OP means 2011?

You assumed correctly.