The ABC's of Finding Investment Money

I have a new web site pad4pad.com that helps individuals sell their homes in this depressed market. The concept has caught fire and I am getting news coverage accross the country. What I started out of frustration in selling my own home appears to have potential. Where do I go from here?

Tags: estate, home, house, investors, real, swap

Share This Page

▶ Reply to This

Replies to This Discussion

Permalink Reply by SUp.biz, CEO on July 9, 2008 at 7:27pm: If you haven’t already done it, you should make sure you have protected your personal assets. I would recommend forming an LLC right away, getting a business bank account, and following corporate formalities (such as keeping your personal assets segregated from your business assets).

After that, I would turn to what you seem most from your question: funding. There are several ways to go about this, and I’ve run through some of your options below:

1) Business Credit Cards
The Google founders (Sergey Brin and Larry Page) maxed out their credit cards, and if you have good credit, may be your easiest option.

2) Savings / Retirement Funds
You can draw on savings. I can’t tell from your question, but if you have no full-time employees, you may be eligible to set up a Solo 401(k) (also called an Individual 401(k) or Self-Employed 401(k)). You can transfer the funds from your retirement accounts without penalty into the Solo 401(k) and borrow up to $50,000 or 50% of the balance (whichever is less).

3) Home Equity Loan
If you own a home and are confident in your business, this is a simple way to obtain a sizable amount of funding.

4) Government Loans
Check out www.sba.gov and www.score.org.

5) Lines of Credit
If you have a good credit rating, you may be able to secure a line of credit, which you’ll be able to use by writing checks against it or by using a credit card for that account. The line is usually revolving, such that the amount available to you is reduced as you use funds, and increased as you repay funds. You can use the funds as needed, and interest only starts to accrue when you use the funds. Typically, a bank will demand a personal guarantee from you.

6) Letters of Credit
This is different than the line of credit discussed above. Here, the bank gives a vendor a “letter of credit”, which is simply a written guarantee that the bank will pay a certain obligation if you fail to do so. You don’t receive or have access to funds unless you fail to make a payment, but letters of credit are useful in a variety of ways, including getting the hardware you need on a reasonable payment plan from a vendor.

7) Long-Term Debt
This is a loan that is over one year long. It can be unsecured, or secured by collateral such as accounts receivable or inventory. A loan secured by your accounts receivable is often a good option for young rapidly expanding companies.

8) Angel Investors
Your business might get funding from “angels,” which are wealthy people or groups of people looking to invest in an emerging business.

9) Venture Capital
If angels aren’t an option or don’t offer sufficient capital, you might explore venture capital. Venture capitalists will take equity in your company. If this is your first company and you don’t have venture capital contacts, it will be difficult to get a meeting. As a starting point, you will need to prepare a presentation and executive summary, then get a list of venture capital funds, identify those that make investments in businesses like yours, and choose the particular partners within the funds that more narrowly focus on businesses similar to yours. It is a challenging project.

10) Public Offering
You could explore a Small Company Offering Registration, which is a Q&A styled registration form, for sale of securities up to $1 million. See the Issuer’s Manual at http://www.nasaa.org/Industry___Regulatory_Resources/Corporation_Fi... for more details.

Best of luck to you.; ▶ Reply to This

Permalink Reply by Greg Holt on July 10, 2008 at 12:37am: Great info. Thanks. We are leaning towards the Angel or venture capital options. I am finding that this is a very difficult task.

Greg; ▶ Reply to This

Permalink Reply by Robert Johnson on September 11, 2008 at 12:47pm: Greg,
There are a number of ways to bring outside capital into a business. Your "optimum" approach (Capital Strategy) will depend upon several factors beginning with:
How much capital are you seeking at this time?; ▶ Reply to This

Permalink Reply by Greg Holt on September 11, 2008 at 6:22pm: Robert,

We are looking for $5-$10m.; ▶ Reply to This

Permalink Reply by Robert Johnson on September 11, 2008 at 6:33pm: Greg,
That puts you pretty much in the Venture Capital firm range.

Are you ready for that type of engagement?; ▶ Reply to This

Permalink Reply by Greg Holt on September 11, 2008 at 6:44pm: Not sure. I have never explored venture capital. What is your advice?; ▶ Reply to This

Permalink Reply by Robert Johnson on September 12, 2008 at 11:10am: Greg,
If one is going to pursue the VC folks, I think it's good to know what to expect and be prepared for it.

Perhaps it's best if we continue or "conversation" off line so -send me a PM or contact me directly if you want to get into the details of your situation.; ▶ Reply to This

Permalink Reply by Greg Holt on September 12, 2008 at 5:27pm: Cell is 303-842-7138; ▶ Reply to This

Permalink Reply by Donald L Ward on February 8, 2009 at 3:25pm: BIGGIE SIZE the VISION...Make is Green AND Humanitarian in Nature, and then
get back to me. The 100 M to 5 B funds are SO MUCH Easier to get. Never
apologize for the size of the REAL Vision withing. Man's Wisdom is foolishness
to the ONE that created us. When we make it a GLOBAL Vision, we will easily
attract the TEAM capable of playing with us at the level.

Funds don't come to the Asset, the DEVELOPMENT Concept...but the TEAM
that will be required to Execute the Plan. It all comes down to placing
the Right Magnets into place, and then the RISK Reducers...Investors expect
to hear about in the Plan, but seldom do.

I would be happy to send you a very expensive Business Evaluation Plan,
that our Hedge Fund Partners developed....it's on me. I am also a Gatekeeper
to 40,000 CEO's, Investors, Bus Owners...1/3 of whom are Very High Net
Worth Individuals. Angel Investors in our Network...have NO interest in
taking over or one day running your Business. They do expect you though
to have a TEAM of Advisors. With 3 your are Free, with 5 You Thrive,
with 7, you are either in Heaven or have formed a Committee!

Too much to share, but I never chase folks down to help them. MENTORS
that do that...have their own agenda...perhaps we will talk one day.
Looking Always Forward, Don Ward; ▶ Reply to This

Permalink Reply by Koren Ng on September 14, 2008 at 11:40pm: Hi Greg - what did you do to get news coverage? That is wonderful...what city are you in - I can try to locate an investor club and you can offer your services to them and charge to make income.

Koren; ▶ Reply to This

Permalink Reply by Greg Holt on September 15, 2008 at 10:12am: Koren,

We did a press release through Mass Media Distributions. The response was overwhelming. The investor club would be great! Thanks for the help.

Greg; ▶ Reply to This