Creative Financing for Startups

And so with the earlier post on cash floats as a form of sophisticated creative financing for startups, begins our new series on how to use creative financing for a startup when both venture capital and angel investor money are not available. 

Have a question about creatively financing your startup? Send me an email describing your situation and needs. The more detail the better. I can't promise to answer every email but will use the two or three best ones each week.  My email link is at the bottom of the website.

Comments

[Neil]

I'll be following this closely.

I was talking to a new guy at work yesterday and heard an all too familiar familiar story. He had a good paying job at $80K a year, and the company changed the comp. structure so he'd only make $50K. So he quit and got out of the business to do something else.

My best friend from college has had the same shit happen to him too multiple times. He makes too much so he gets fired. His brother got fired for selling a big deal because his boss couldn't handle him making more so he shit-canned him and took credit for the deal.

Why even bother working a sales job in Corporate America? They constantly screw with your quota or fire you for making too much(being too successful)?

I want to start my own business.

[Caprinardo Delirio]

It wasn't that long ago that corporations didn't mind rewarding people who did good work. If you were making them enough money, you were pretty secure in your job and stood a good chance of being promoted (and trained if necessary).

Can't say that it's worth the trouble without those things.

[Neil]

It wasn't that long ago that corporations didn't mind rewarding people that did good work. If you were making them enough money, you were pretty secure in your job and stood a good chance of being promoted (and trained if necessary).

Can't say that it's worth the trouble without those things.

Hewlett-Packard is famous for their ever-changing quotas. They get rid of a lot of older, more expensive sales people that way.

[Neil]

A guy who my friends from the original post know, was hired by a tech recruiting co. He negotiated an $92K 1st year base. He was doing well and was fired right before Year 2.

His contract stated he could not compete with them if he left the company.

Since the guy is a deviant, he started his own company using the same contracts and contacts. They gave him shit and threatened legal action, but he pointed out the agreement was only if he left voluntarily. He was fired.

To make a long story short the guy is now making six figures on his own and owning the fuck out of his former employer.

[Digman]

Interesting you should bring this up, I have a potential job at a top flight software company as well as an open offer to help some guy start up his own software company.
If the big corp. gives me a shot, I'm taking it. Big money, but also big pressure. I need to look at the employment contracts carefully.

[Caprinardo Delirio]

I work for a tech company, and our churn rate for sales people is 100%.

That's right. 100%. Every 12 months, there's a whole new group of sales people.

[Stanford MBA]

Institutional sales people at bulge bracket investment banks average around $500k/yr, and many make over $1 million/yr.

In institutional sales at investment banks, top producers never get fired...because the sales person can walk across the street to another investment bank, and take their business with them.

Everything is relationship based.

[Google Shareholder]

Not a big numbers example, but it illustrates the short sighted stupidity of the corporate mindset.

Many years ago I had a retail job at a "startup" music store chain.

The gig had base pay but no commission. Since I didn't need the job, I quoted them the high side of what I thought was fair, and to my suprise they accepted. Turns out that my base was higher than guys who had been there for 2 years, and that's AFTER their raises.

Knowing that the axe would fall on me first, I sold the living shit out of stuff. I concentrated on the expensive merch and shit that had been sitting there for years; cleared out 6 figures woth of stuff in the first 4 months.

My reward for this? A year after I started, I was the first one let go.

2 months after that, it finally dawned on the asshole manager that I was THE guy doing all the selling. They begged met come back, but at that point, I didn't need the hassle.

I offered him a deal: I set my own hours, no extra bullshit like inventory or meetings, I make the deals - pay me 10% straight commission. He flat out refused, saying that they couldn't offer commission to anyone. Oh well...

3 months later, they bring in some "rainmaker" from another chain and offer him 15% commission + base. He winds up stealing 50K worth of stuff and goes to jail.

6 months after that, they whole chain went to commission. 6 months after that, they went out of business.

[Louis]

I know a couple mortgage brokers who worked for small shops ..

One got fired with about 10k in commissions in his pipe ..got fired for performance issues and never saw a dime..

Little guys do it too

[Louis]

Can I ask the name of the defunct music chain?

[Google Shareholder]

Makin' Music

[Louis]

Never heard of it.

[X-box]

I'm currently founding a company and we're in the process of developing a prototype but I'm having a major problem: I cannot FIND any angel investors, as in I have no clue where to start.

I scour the web and find big name ones who are busy, but it's fairly hard to find angel investors close to home (Vancouver, BC) that don't require me to pay them thousands of dollars just to tell them my idea and show off my prototype.

Anyone have any ideas?

[Edweirdo]

My friend and I have been working on a startup idea. We have a biz plan/presentation mostly done, albeit still a bit rough, with a prototype/demo ready. Originally we planned to go through angels but now think VCs are necessary due to our higher $$ requirements. Where can I find out about the VCs? Aside from the bigger names like KP, Sequoia, and Benchmark, how can I find out the reputations about the firms. I prefer not to take the VCs words literally and want some back channel feedback; however, my back channel contacts are slim. Thanks.