I've been looking around for an alternate source of capital for a planned growth in a business but given the makeup of hosting I'm kind of at a loss as where to look. Most business loans and large venture capital firms want a minimum of direct credit card transactions per month, Paypal does not count and the company CEO has clean credit but also has NO credit history. The amount of capital isn't large but is more than credit cards, friends and family etc can provide. I was curious if anyone had any creative ideas for finding venture capital / loans etc.
Thanks

That actually depends on what project you are going into. Partnership is definitely a good try. Try to make a good business plan which can attract investors.

E.g if you are selling a software, get the right audience to read your proposal and try your luck.

If you are going on hosting business, I am sure there are many who offer free reseller plans if you can show the extra bit that you can. This will start you somewhere cheap and good

If you are going for recurring payment, I would say, work and save is the best way out since you can get a better credit record with an employment. Loan will thus be easier and your saving will be able to work something out.

Definitely, you can provide your service here and earn as you learn. This will not only get you venture capital but alot of experience you will need.

Hope this will help

i was kind of trying to keep things informational, but yes we do have a business plan, we are already an established hosting provider etc. As for finding joint venture partners, where would one look for that sort of thing? All the searhc engines bring up are pay for lists of venture capitalist type sites. Thanks for the feedback though, it does confirm my thoughts to this point are in common with at least one other host.

Well, i think when you are at least established, you do not look for other hosting providers for joint ventures since you can manage on your own. I would think you can partner with design companies to bid for a big project. E.g. to be the Host for a local event with their website designed. With this you get advertisment + pay.

If you are looking on an alternative way, you can look for a programming developer and create a software that will benefit other hosting companies (e.g. something like cpanel or shopping carts). I guess leasing licences for a useful product might bring you somewhere. Don't forget your bank though. With a solid business plan and proofs, it leaves all the negotiation to you to make a deal somehow somewhere.

With that, I WISH YOU ALL THE LUCK ..

Greetings:

We started in June 1995, but by mid 1998 we did have need for more working capital than debt methods provided.

In our case, we formed a "formal" board of directors (Pennsylvania like many other states allows the founding shareholders to be their own board; which is not a formal board), and we raised approximately just over $40,000 from the board as well as a very small number of "small" angel investors (10 investors total including the founder).

Looking back, I actually wish we didn't go the investment route but stuck to growing on cash flow (as we have done since that time).

While all of our investors are friendly; you can get into issues (which would merit its own book) that would be better avoided as a very small company (larger companies have departments to take care of such issues et all).

So, you may want to check out what might be involved in your state (there are typically limits on # of investors, size of investments, disclosure, etc.) to get investment money.

However, while you are researching those issues, also check out the costs (not all of them are $ oriented) in investor relations, increased paperwork filing with your state, etc.

Thank you.

I agree with dynamicnet, investors can be a pain in the %&#@. In a former hosting business of mine, we actually created a new business unit that ended up generating really good cash flow for us to expand our hosting business. We found a niche and started selling software that was related to our expertise. We pretty much doubled our cash flow.

Into starting a LLC (limited liability company) for investors to give buy shares in the llc and not your company. Don't give investors control of your company.

You acting as the director of the LLC have the control of the money and where and how it is spent.

Often times investors will accept bank statements as income proof. And since paypal is connected to your account, there will be a clear paper path.

Good luck, feel free to pm me if you have questions....

Greetings BrianW:

If investors buy into an LLC, is that not the same thing as them having voting stock?

In our case, the founder maintains over 80% of the controlling stock; the main issue gets into increased cost, increased paperwork, along with other issues.

Thank you.

Partnerships could be an option.

No, voting stock would be if you sold them shares in your company directly. With an LLC you sell them shares in the LLC itself (like a silent partner) and not in your company. The only time shareholders could vote is if the manager of the llc negates their duties and the shareholders vote them out and someone else in.

Please note: this is not intended to be legal advice!

I appreciate the advice, especially the examples of personal history etc. I would prefer to launch a joint venture with a like minded partner, a few people who I have shared my business plan and the details of the venture have all been very interested in participating, just unable to provide capital. I wasn't looking for another hosting biz owner to partner up with, though as long as the situation was mutually beneficial I could see that as a possibility. Like I tried to explain, the ideal would be to find a place where persons capable of joint ventures "hang out" so to speak, obviously if traditional financing was a possibility the term "alternate finance" wouldnt be in the title. I just wondered if anyone had managed to find a creative solution I had overlooked but apparently not or not one they would share. :) I do see this ending up with a traditional board and investors but its just too early for that, maybe "seed capital" or "start up" would be more appropriate - its growth but in a new direction based on software development etc.

Greetings:

On the partnership route, do be careful.

Over the years I've seen friendships destroyed and businesses go under because partners who got along great at first didn't see eye to eye years later.

Please strongly consider a written business plan AND an operations plan which includes the responsibilities (time, financial, and otherwise) of each partner.

Patners need job descriptions as much as employees need them.

Thank you.