Finance for new venture

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dave29

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Hi.

I work full time for a company. They pay my salary etc.

In my spare time I've started a new venture with a friend. We still work our normal jobs and probably will unless the this venture takes off.

We've registered with Cro but not with revenue yet. We are not earning profit yet. Just some losses related to starting up.

We've a full website which is working and taking customers.
We've a payment processor and facebook page with over 1300 followers.
We have made some sales but still not any profits just yet.

We are wondering if there's any funding out there for something like this. We don't want to give up our jobs just yet.. But have a feeling there is no funding unless we are full time doing this new venture.

Is our own personal funding the only way to get capital for this? I'm guessing it is. But wanted to ask.

Thanks.
 
On the basis of what you described who would find a loss making start up that the founders don’t believe enough in to work at it full time ?
 
The only people likely to give you money to keep it going on the side are friends/family. Anybody investing in the company will want it to grow and become something they can sell and make a return on, which would require you working on it full-time.

But keep in-mind the purpose of any investment is to fund the business for growth, that includes paying the founders a modest salary. So do the numbers and see what you can get by on personally, then look at how the business model would look with you drawing that salary. If the you cannot see how to reach profitability/scale with the two of you drawing modest salaries then it’s probably not a viable business and you should just keep running it on the side.
 
dave29 said:
Hi.

I work full time for a company. They pay my salary etc.

In my spare time I've started a new venture with a friend. We still work our normal jobs and probably will unless the this venture takes off.

We've registered with Cro but not with revenue yet. We are not earning profit yet. Just some losses related to starting up.

We've a full website which is working and taking customers.
We've a payment processor and facebook page with over 1300 followers.
We have made some sales but still not any profits just yet.

We are wondering if there's any funding out there for something like this. We don't want to give up our jobs just yet.. But have a feeling there is no funding unless we are full time doing this new venture.

Is our own personal funding the only way to get capital for this? I'm guessing it is. But wanted to ask.

Thanks.
Click to expand...
Is the business scalable and is there a potential to trade internationally?
If yes then talk to Enterprise Ireland. If no then talk to your local Enterprise Board.

Staying in your current job while the business grows is prudent and, in my opinion, would not deter investors but if I was you I'd be looking for State support first and private investors as a far second. Many angel investors are great but many are just looking for a fast buck and can be quite controlling.
Whomever you are talking to, make sure you have your numbers right and you know then. Cashflow is just as important as profit for a startup (which is why staying in your day jobs is a good idea).
Whatever you decide to do, best of luck. It is an exciting and creative and fulfilling thing to do (if it goes well!).
 
Start with your LEO, as another poster said, they will give you good advice and mentoring and also walk you through the grants process. For example there is a grant of potentially €2.5k for a transactional website if it meets the criteria as well as employment grants, feasability grants etc.
 
FWIW my experience in raising money for a couple of businesses is that EI do not want to be a sole investor, rather if another investor is putting in X they might match it etc. But 100% agree they provide some good advice and are a great service for SMEs.
 
Thanks for all the replies.,

It can scale. Would stay in Ireland.

We could start a new site in the UK. our current site is a .ie so we'd need something different for the UK.

I will consider asking friends and family to invest money.

Would I need to offer a % in return ? .. like 10% + whatever you invested in 1 year/18 months or something like that ? Is 10% too low ?

thanks.
 
dave29 said:
Thanks for all the replies.,

It can scale. Would stay in Ireland.

We could start a new site in the UK. our current site is a .ie so we'd need something different for the UK.

I will consider asking friends and family to invest money.

Would I need to offer a % in return ? .. like 10% + whatever you invested in 1 year/18 months or something like that ? Is 10% too low ?

thanks.
Click to expand...

Angel investors will look for opportunities with 10x potential - not 10%. Friends and families might lend you cash and be happy with 10%. But a standalone investor in early stage start-ups won't.

And decide what sort of financing you want - a loan (or similar) where you pay a specific rate back like the 10% you mention. Or equity - an investment into the company with no guaranteed return but will then get a full % of the growth in the company.
 
Right now it's just a loan. Just for marketing really- We want to target a bigger audience, but we are limited.
We've put a lot in already .. and I feel if we had €5,000 to spend on marketing over the next 3-4 months we'd be in a great position.
 
dave29 said:
Right now it's just a loan. Just for marketing really- We want to target a bigger audience, but we are limited.
We've put a lot in already .. and I feel if we had €5,000 to spend on marketing over the next 3-4 months we'd be in a great position.
Click to expand...

Ok - my suggestion is that you don't want third party early stage investors given the scale and proposed usage / term. In order of (my) preference I'd look at....

1) Friends and family
2) One of the lending platforms (Linkedfinance or similar)
3) Traditional bank lending in a personal capacity (would require some form of collateral probably)

Others might have better suggestions
 
I’d also suggest you will generally need more money that you think and for longer than you think.

So assuming they’re open to it, rather than saying to your family they’ll get their money back in 12 months, maybe say up to 3-5 years with interest paid each year you keep the money, that gives you flexibility and an incentive to pay them back if you’re able to.

No idea what the costs of the business are, but €5k sounds like a very very small amount of money. Again if they’re up for it maybe try and get more but just hold it on deposit if you don’t spend it, rather than going back and back for more.
 
We don't have salaries to pay.. The website is built. I update it daily with small tweaks.

Main costs will be marketing .. don't get me wrong, We could spend 20k a week on marketing if we had it. but we want to be realistic with what we can afford or get a lend of.
 
Have a look at this
You can certainly use a lump of it for marketing. You have to do an afternoon webinar thing before you can apply but the process of very easy (about 15 questions and a project proposal) it’s max €2500 and you’ll have to find 10% of that yourself.
 
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