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Integrity & Awareness by Paul Burnstein

Monday, March 5, 2007

Enticing Lenders

I have been communicating with an associate who is looking for funding for a pre-revenue start-up. The business sounds very interesting and they have some great people assembled.

Being pre-revenue, the revenue on their financial statements (which I have not seen) is all estimates. They do not have any assets. The principals will not provide personal guarantees or any personal financial information.

They would like lenders to loan them money, but based on what?

From everything I have seen, they need equity investors who are interested in their product to bring in the substantial sum they are looking for.

Obviously not all of my readers are looking for debt financing (if you are, let me know), but realize that if you are, you have to be able to offer some form of security for a lender: assets, including real estate, the existing business track record, personal guarantees, etc. The lenders need to see that they are not the only ones taking on any risk. Now if you are looking for equity investors, it is a different story. They may invest more in the people and the concept of a pre-revenue venture, but even along those lines, there are no guarantees.

2 comments:

Anonymous said...

Paul - I read most of your blogs and I see that you and I share similar feelings regarding how others think in "real time." What I mean is that some seem to be totally oblivious to the rest of the world. This blog talks about those that think just because they have a good idea everyone will knock their doors down to give them money - NOT!

Another mentioned the inconsideration of the person tying his shoes in the air ramp - Happens everyday - Why?

Another about not having the courtesy to let someone know when you are not going to make an appointment. RUDE!

As I said - we are on the same page here. Keep up the good work and welcome to blogging.

To your Success,
Rick

Anonymous said...

Of course there are unconscious moments--and I'm almost certain I've added to the wide, wide world of stupid human tricks--but isn't it great to look at folks who are clueless in real time and see the gift of their rudeness and their being unaware of their impact on others (a brief distraction from our own awareness training)and think, "thank God I'm not that guy!"

Just something to be grateful for--any day. Thank you for increasing my awareness of being compassionate. All the best.