Do a little digging and you'll see there are TONS of millionaires out there who started a small bank in backwater towns in the South.
Ever pitch a VC Firm...?
- Thread starter GerardWon
- Start date
That's how virtually all banks are started. Some dude has some money and some friends with money. They start a bank and make more. The thing people don't understand about banks is the initial investment is relatively small compared to the amount of money they control. Most of their money is just borrowed from the govt. or given to them by customers. Simple arbitrage, but with a lot of hoops to jump through.
You should really understand the difference between the different kinds of financing. Having been fortunate enough to turn down some VCs in the past several months (wasn't a good fit) a word of advice from my old boss (who now runs PE shop):
"VCs only want you when you don't need them".
Secondly, even though bank financing is hard, sometimes a bank is better than a VC. Why? Because they are financing via debt vs. equity. All they want is their money back and those debt payments made (I'm talking about a traditional money center bank not an investment bank).
A VC will want a seat on a board, be in your business and the like. Of course the benefit is that they will have a vested interest in introducing you to the right people, helping you do JV's so on and so forth.
Another thing is that every VC that is worth its grain has an investment strategy.
The fact of the matter is, you need to understand that the average VC probably doesn't know much about IM, who's who on internet forums or the like. You have to prove yourself. Numbers verified by a 3rd party is what counts.
Also, go out of your way to start formalizing your intangible assets. If you've found a particular way of getting traffic, of automating a process of patenting this or that FORMALIZE IT. This is what separates the websites that sell for shameful multiples on flippa vs. those that sell for 8 or 9 figures via other means.
You have to document and formalize everything you do.....
Lastly, you should look and see which VC the endowment of your college (or your wife's or best friend's or business partner's etc) went to. Often times they have relationships with top VCs that can get you in.
Ever wonder why there are so many VCs in boston for instance? All that endowment money.....
PC
Finally you should understand that successful VCs invest in PEOPLE and not IDEAS! Good ideas come a dime a dozen. The people who can execute effectually don't....
"VCs only want you when you don't need them".
Secondly, even though bank financing is hard, sometimes a bank is better than a VC. Why? Because they are financing via debt vs. equity. All they want is their money back and those debt payments made (I'm talking about a traditional money center bank not an investment bank).
A VC will want a seat on a board, be in your business and the like. Of course the benefit is that they will have a vested interest in introducing you to the right people, helping you do JV's so on and so forth.
Another thing is that every VC that is worth its grain has an investment strategy.
The fact of the matter is, you need to understand that the average VC probably doesn't know much about IM, who's who on internet forums or the like. You have to prove yourself. Numbers verified by a 3rd party is what counts.
Also, go out of your way to start formalizing your intangible assets. If you've found a particular way of getting traffic, of automating a process of patenting this or that FORMALIZE IT. This is what separates the websites that sell for shameful multiples on flippa vs. those that sell for 8 or 9 figures via other means.
You have to document and formalize everything you do.....
Lastly, you should look and see which VC the endowment of your college (or your wife's or best friend's or business partner's etc) went to. Often times they have relationships with top VCs that can get you in.
Ever wonder why there are so many VCs in boston for instance? All that endowment money.....
PC
Finally you should understand that successful VCs invest in PEOPLE and not IDEAS! Good ideas come a dime a dozen. The people who can execute effectually don't....