The Seed Capital for Startups Blog

Startup Financing: How to Start a Company With No Money

How to Start a Company Without Any Money

I first heard about John Paul DeJoria back in the mid 1980 and have followed his career on and off ever since. Here's a man who belonged to an L.A. gang member in his youth and was at one point homeless. Today he's a billionaire. This is a video worth watching because Paul explains how he started his company without any money. He exemplifies what the Smart Startup Guide is all about.

John Paul DeJoria: 2011 Entrepreneurship Conference Keynote

Startup Funding: Chocolate Bonds

How to Finance a Company Creatively

No entrepreneur wants to admit that financing a company is a really tough challenge. This holds true for companies with multi-year operating histories as well as startups. After realizing this point back the 1980s, I started collecting examples of creative financing techniques. There's a solution for almost any situation and this is an example of one.

A chocolate company in the UK is raising capital by issuing bonds which pay the bearer in chocolates rather than in interest:

Holders of the £2,000 Chocolate Bond will receive six free Tasting Boxes a year worth £107.70 per year which is equivalent to a 5.38% return (6.72% gross return for a basic rate taxpayer) and those holding the £4,000 Chocolate Bond will receive 13 free Tasting Boxes – a full year’s supply! Worth £233.35 per year which is equivalent to a 5.83% return (7.29% gross return for a basic rate taxpayer). (source)

For more ideas on how to creatively finance companies go here.

How to Raise Startup Capital: Lessons From Deal-makers

How to Raise Startup Capital: Lessons From Deal-makers

From working with entrepreneurs since 1986, I have noticed one glaring problem most have. Most have no idea how to sell their startup or deal to investors. Instead they just write a business plan and shotgun it out to everyone. Then after a few months, when no one has jumped on it, they start complaining that investors are "too stupid" to see how wonderful the investment opportunity really is.

What rookies fail to take into consideration are tangible economic incentives and psychology. Deal-makers, on the other hand, understand how to offer short-term economic incentives made all the stronger by appealing to psychological needs.

Would you like to learn how to put together B2B deals? If you answered, yes, get a copy of How Deal-makers Raise Capital.

Order it today before the price goes up.

How Deal-makers Raise Capital

Or get the full manual on creative startup financing.

Raising Capital: 88 - The Narrow Road: A Brief Guide to the Getting of Money

88 - The Narrow Road: A Brief Guide to the Getting of Money by British billionaire Felix Dennis

Felix Dennis' long-awaited 88 - The Narrow Road: A Brief Guide to the Getting of Money is finally out.

There's no information on this new book on raising money on Amazon yet, but even if it's only half as good as his other business classic, it will be a worthwhile addition to any entrepreneur's library.

I am eagerly looking forward to reading this one. Felix Dennis is an inspirational figure in the Billionaire Strategies Course.

Get more information on 88 - The Narrow Road: A Brief Guide to the Getting of Money.

How to Use Creative Financing to Start Your Business

Free Mini-Course in Creative Financing for Startup Entrepreneurs

Are you an Entrepreneurial Champ or Chump? Find out.

Champs are the ones who understand how entrepreneurial finance works. Chumps are those who sit around hoping that some kind stranger will give them money after reading their business plan. When it doesn't happen, they complain about investors being "too stupid." You can increase your chances of being successful in attracting capital down the road if you learn how savvy entrepreneurs are always moving their companies forward.

You can subscribe for free here: Send Me Creative Startup Financing Mini Course Right Now!

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a link in the confirmation email.

No thanks! No time to waste, just let me have the creative financing manual for startups!

The Smart Startup Guide: Creative Financing for Startups

This is the first chapter from the creative financing manual The Smart Startup Guide.

AVC Smart Startup Guide

Invest in your copy today and receive a $30 bonus. Click here.

How to Close Angel Investors

How to Kill the Angel Investor "Deal-Killers"

Have you experienced the frustration of dealing with a self-proclaimed "interested" angel investor who you just cannot close, no matter how hard you try or how many months go by? If you have, read on.

After writing last month about angel investment "Deal-Killers," I received a slew of emails and calls from frustrated and angry entrepreneurs unable to close deals with angel investors. Many of  them had invested more than a few months talking to investors who had repeatedly expressed a commitment to invest. Yet every attempt at closing the deal had ended in frustration. Some of the angel investors finally expressed a reluctance to invest at this time while others have just dragged their heels and avoided the subject. Either way, the result is the same. The frustrated entrepreneur can't get the money he or she desperately needs for their company.

As pointed out in the previous post, the resistance often stems from the angel investor's uncertainty over how they will get their money back plus any profit that may have accrued. To be honest, their fears are warranted. Minority shareholders in a small private company (i.e., a chronically cash-strapped one) are at the mercy of the majority who can easily find a hundred better uses for limited capital than buying out investors--especially the passive variety. Both sides always have a convincing rationale. The minority investor feels that it's time he was finally rewarded for taking a gamble on the company at an early stage. Meanwhile the majority are convinced that if they just hold onto that money for another six or twelve months, it will allow the company to hit a new plateau which will insure its long-term success.

Who is right? Probably both sides to a degree.

With this problem in mind, I developed a tool for raising money that addresses the concerns that all angel investors have about investing. Indeed, it tackles them head on. In a nutshell, How Deal-makers Close Investors demolishes the big deal-killers:

-The inability of investor and founder to bridge the valuation gap.

-The investor uncertainty over the chances of a profitable liquidity event occuring.

-The investorss fears that majority shareholders will run roughshod over him.

Closing Angel Investors With Revenue Royalty Certificates (RRC)

Revenue-based financing is finally emerging from the shadows and I have been one of its pioneers.  This product consists of a book in pdf and an accompanying spreadsheet in Excel. Contained within the package is all the knowledge you need to be able to utilize this innovative financing instrument to close the deal with angel investors. The instrument, called a Revenue Royalty Certificate (RRC) or Revenue Participation Certificate, is an off balance sheet loan which clearly demonstrates to the investor how and when they will recover both their principal and profit while also potentially receiving an equity stake in the company.

However, the RRC is not just about benefits for the investor. This instruments also offers substantial benefits to the entrepreneur. I am referring to freedom and autonomy here. With an RRC, the investor is unlikely to interfere with your management style as long as the payments are being made on time. The RRC is a win-win for both parties.

There are a few more bonus lessons contained within which reveal how sophisticated financiers select their target investors and do deals.

Get more information on how you can raise capital with a Revenue Royalty Certificate.

Do yourself a favor and stop spinning your wheels trying to do it the wrong way.

Space I can recover. Time, never. - Napoleon Bonaparte

How to Finance Your Startup in a Depression

Where do you rank on the entrepreneurial scale of 1 to 10? Find out.

If you are trying to finance your startup in today's depressed economy, I feel your pain.

It's tough out there. Even the Venture Capitalists are seeing their money supply reduced dramatically. Angel investors aren't as liquid as they used to be.

With all the cash taps basically shut off where do you find startup capital for your business?

As the economic news becomes bleaker by the day and the word "depression" no longer feels like hyperbole, it's time for entrepreneurs to hunker down and become very realistic about how they will finance their startups. The days of writing a business plan, traipsing into an investor's office, and dropping off a copy are over. Indeed here at the opening of 2009, we are in a situation which is the exact opposite of 1999 when there was loads of capital available to fund even the silliest of ideas. Back then it seemed as if at least half the workforce was walking around with a stack of business plans under their arms knocking on venture capital firms' doors.

Well, not anymore.

Only the tough and financially savvy will be able to cobble together the financing that their startups need to launch and survive in this economy. This is not an economy for wannabes.

With this reality in mind, I am starting up a new newsletter which will cover startup financing lessons for a depression or deep recession.

You can subscribe for free here: Subscribe Me to Startup Financing

You will need to confirm your subscription by clicking

a link in the confirmation email.

Startup Business Financing for the Depression

Are you trying to finance your startup?

I feel your pain.

With all the cash taps shut off where do you find startup capital for your business?

As the economic news becomes bleaker by the day and the word "depression" no longer feels like hyperbole, it's time for entrepreneurs to hunker down and become very realistic about how they will finance their startups. The days of writing a business plan, traipsing into an investor's office, and dropping off a copy are over. Indeed here at the tail end of 2008, we are in a situation which is the exact opposite of 1998 when there was loads of capital available to fund the silliest of ideas. Back then it seemed as if at least half the workforce was walking around with a stack of business plans under their arms knocking on venture capital firms' doors.

Well, not anymore.

Only the tough and financially savvy will be able to cobble together the financing that their startups need to launch and survive in this economy.

With this reality in mind, I am starting up a new newsletter which will cover startup financing lessons for a depression.

You can subscribe for free here: Subscribe Me to Startup Financing

Learn how to close deals with angel investors.

What's the worst part about startup funding from family?

I was just talking to someone about startup funding sources and the question came up, "What the worst thing about having startup funding from family members?"

The one word answer:  "Thanksgiving".

If you are going to take money cousin Bob or uncle Ignatius, treat them as you would any arms-length investor. In other words, paper the transaction in the same manner that you would paper an angel investor investment or loan.  This way all parties understand fully what they are getting themselves into.

Never rely on anyone (including yourself) to accurately remember what was agreed to. Even though you may be able to do so the other party might have heard something completely different.

That's why there's an old saying, "A verbal agreement isn't worth the paper it's written on."