- Jul 7, 2003
- 47,222
Can I ask- would you be prepared to join forces and come in together in your bid for my non-business? I feel the input of two dragons would be invaluable.
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Equity investment available
- Thread starter Goldstone1976
- Start date
Can I ask- would you be prepared to join forces and come in together in your bid for my non-business? I feel the input of two dragons would be invaluable.
fat old seagull
New member
Well I guess 'Goldstone' will have to make that decision. In honesty I'm not enamoured with a £3.75 investment to only recoup a £5 admin fee. Not Bigtime enough for FOS the entrepreneur.
Lord Bracknell
On fire
Dragons? Don't you mean Bluebirds?
fat old seagull
New member
Not as in Cardiffians I pray? If that's the price of Dragons Den participation I withdraw all previous offers. And hope some degree of sanity will return... poste haste.Billy in Bristol
Well-known member
What about Bristol based Seagulls fans?
Justice
Dangerous Idiot
As you seem to have plenty of capital why don't you start your own business and keep all the profit ? ..or maybe you need some ideas first.
GingerBeerMan
3-0
- Dec 29, 2011
- 8,029
That's not how angel investment works. Trust NSC to turn this serious thread into a haggling match for a £10 non-existent business.
Justice
Dangerous Idiot
That's not how angel investment works. Trust NSC to turn this serious thread into a haggling match for a £10 non-existent business.
Lets be honest here, if the banks were lending to small business's people wouldn't be forced to take this expensive source of funding.
tinycowboy
Well-known member
Given that Goldstone1976 would not be entitled to any repayment of his investment unless someone buys his equity stake off him, and that he can probably add more value to the business than less experienced employees of a bank could, in the short-term, it's a cheaper option - free expert advice, no interest/capital repayments, aligned interests. If the business IS sold, then obviously the original owner gets less than they would have done, but would they ever have got to that stage had the investor not come in? Clearly there is a risk, but I think Goldstone1976 has set out his basic principles fairly clearly in the original post. I look forward to seeing the programme on Seagulls Player....
- Thread starter
- #31
Spot on. I consider myself a decent businessman who can sell, administer, run a tight ship financially and recruit/retain good employees. However, I'm not particularly creative, so I know that there are plenty of folk out there who have a really decent idea, but lack the cash, and possibly business experience/expertise to make the best of that idea. The idea is that 1+1=3. It's a very rare person that can grow a business from zero to a decent size all by themselves; this offer may appeal to the majority who may value some extra cash &/or some input from someone who has grown businesses (that already have the idea) from a small size to something bigger.
I think you misunderstand my offer, pretty materially.
Banks, even when they were lending more freely, would charge interest that would have to paid monthly or quarterly. In return for their money, they would require security - if the company had assets they would require a fixed charge over those assets. In addition, the business owner would often have to take a second mortgage on their house &/or offer a personal guarantee to the bank, so that if the company defaulted on the loan they were personally responsible.
By contrast, my offer is one of cash for a minority equity investment. There is no interest. I have stated in the OP that I'm not particularly interested in a dividend stream. Thus, no cash leaves the business while it is growing. As I would be a minority holder, I would have no control over the activities of the business (that's why the trust issue I mentioned in the OP is the single most important thing). The only way I would recoup my investment is if someone bought my shares at some point, likely to be in the 3-10 year timeframe, hopefully at a profit to me. The most likely way for me to realise my investment is if the business was sold, since few people would be interested in buying a minority stake. What does the owner get financially? Well, 90% of a company worth, say, £5m in, say, 5 years is an awful lot better than 100% of something worth, say, £500k. Sure, if the company is successful, I recoup a lot more than an interest rate would have yielded. However, if the company fails, I lose my investment entirely. Hopefully, the injection of cash and access to someone who has grown businesses for his career will make it more likely that the business is successful as well as providing the satisfaction to the owner that they have realised their dream of founding and creating a business.
- Thread starter
- #32
Hi. Part of the reason I said Sussex/southern Home Counties is that I'm planning to move back to the area at some point in the next 6 months to 2 years. It would make sense for me to have at least some of investments in the area. That said, I'm close to making an investment (sourced more traditionally, through an angel network) in Bath. So, if you're interested in exploring the idea, it might be worth dropping me a PM?
Justice
Dangerous Idiot
Not exactly free advice is it, nothing in business is free my friend.
Billy in Bristol
Well-known member
Many thanks and will do.
Super Steve Earle
Well-known member
Let's be even more honest here. The banks are desperate to lend to businesses and under extreme pressure from the government to do so. But many businesses, not unreasonably, feel it is not wise to borrow at the moment. Others, feel a unsubstantiated request to the bank is all the effort they need to put in.
kingcole
Well-known member
If he is not charging for the advice and not taking a wage, then yes, it is free,
- Thread starter
- #38
The plan is to arrive at a fair price for the equity stake in the company without building in any element of advice into that price.
As tinycowboy says, my interests and the interests of the owners are then perfectly aligned. Given I have already stated that I'm looking for capital appreciation, the less cash that I withdraw from the business, the better. Obviously, the owners need to continue to withdraw cash in order to live! So, the provision of advice and attendance at Board meetings will not incur a charge. If the owners were to decide that they wanted extensive support in, for example, a two week sales trip overseas, I would most likely seek cover for my expenses and may, depending on my income at that time and the financial circumstances of the company, charge a modest day rate. However, this is getting way ahead of ourselves. The most likely scenario is that I simply provide some cash for an equity stake and then attend Board meetings, where I can provide advice and be available on the end of a phone between meetings. In this scenario, no charge will be made to the company. Obviously, I would hope that any advice I provided would, in the long-term, increase the value of the company and I would share in that increase on a pro-rata basis to the equity ownership. I covered this in post #31.
To head off in advance any accusation that I'll make money through any expenses I may charge if the company asks me for proper work, beyond advice, I have modest habits when I spend the company's money. For example, I'm doing some consultancy in the early part of next week for a company that I do not have an equity stake in and have booked myself into a B&B @£45/night. I charge mileage at the HMRC's guide rates. I fly economy. I rent the cheapest cars.
- Thread starter
- #39
So, for anyone who's interested, here's an interim update following a week.
14 people have made contact. Only two are totally inappropriate - one because he hadn't read the OP properly and one because, well, he was taking the p*ss most likely! I'm awaiting initial information from a further five. Meetings have been arranged with seven people, three of which have already happened. Of the final three, one owner is considering whether he wants to take it further and the first steps of due diligence are being planned for the other two.
It's been fun so far, and I'm hopeful that I'll hit my target of investing in Sussex-based businesses. How much cooler is it that the owners are also Albion fans or who know someone who is?!
14 people have made contact. Only two are totally inappropriate - one because he hadn't read the OP properly and one because, well, he was taking the p*ss most likely! I'm awaiting initial information from a further five. Meetings have been arranged with seven people, three of which have already happened. Of the final three, one owner is considering whether he wants to take it further and the first steps of due diligence are being planned for the other two.
It's been fun so far, and I'm hopeful that I'll hit my target of investing in Sussex-based businesses. How much cooler is it that the owners are also Albion fans or who know someone who is?!
tinycowboy
Well-known member
Nicely avoids any awkwardness when someone suggests that clients are entertained at the Amex. I think all of this shows what we already know - people in this forum who don't know each other generally feel they can trust a fellow Albion fan more than they would be willing to trust a non-Albion fan - nice that we feel a common bond of sorts, however much of a binfest goes on here every day.