I was wondering; I'm trying to raise venture capital for my company, but I'm not exactly sure what type of model to follow, or who to go to. Anyone got any useful information pertaining to this?

Also, this request may or may not make sense, but if anyone has an old business plan they no longer use, maybe one for the earlier stages of a company, and they could send them over that would be greatly useful.

Are there people who purely dedicated VC to web hosting industry related companies? Or angel investors that do that? Thanks :)

Small Business Adminstration (http://www.sba.gov)

startupx.com (www.startupx.com) sounds kinda interesting to raise funding (as an alternative to the difficult VC situation)

alternatively... use google.com :)

Im not sure at this point in the economic situation that VC's are really looking to invest in hosting companies.

You may find some, but unless your coming out with a new technological breakthrough to hosting, it will be tough


Joe

Check out garage.com

... all those investment shemes are pure crap! :mad:
If you wan to raise cash for a business you should always turn to own ressources, family, making one of your long term friends a partner and check out governmental funds for new businesses.

Well VC are not necessarily all crap. It all depends on how much money you want. If you've been in business for awhile and you have solidly written business plan you will most likely be able to get around 250K to finance your growth through a VC. Lets face it , to an established VC 250K is not all that much of money and in return for their investment they can get up to 20% interest in your company. Assuming that you can show to the VC that you did your homework and you are seriuos about staying in business you will most likely get the money. Question then becomes do you want venture capitalist poking around in your business and telling you how to run it?

Originally posted by matrosov
Lets face it , to an established VC 250K is not all that much of money and in return for their investment they can get up to 20% interest in your company

Umm, try up to 90%.

Not for 250K. Standard here on US east coast is anywhere from 5 to 20% for 250K investment. :)

Originally posted by matrosov
Not for 250K. Standard here on US east coast is anywhere from 5 to 20% for 250K investment. :)

I could be wrong, but I don't see how it can be based on a dollar figure alone. There's risk, type of business, nature of competition, the principal's experience, marketing plan, etc. to consider as well. How else could one judge that a start-up is even worth $250K?

The amount of money a VC will invest, and the stake they'll want of your company, will depend upon what you're bringing to the table.

If all you're bringing is "I want to start a web hosting company", you won't get anything.

If you're coming in with "I want to start a web hosting company which will be different from all the other companies out there because we're going to do xyz, here's why I think it will work, and here's why I think I'm particularly suited for this", you might get $250K, but they'll take a major share of the company.

If you come in with "I've started a web hosting company, it's different from all the other companies out there, people are going to have trouble replicating what we've done, we're making a profit, and we want to expand", *then* you'll get your $250K in exchange for a 20% stake.

Look at it this way: If a VC is willing to give you $x in exchange for a y% stake in your company, he is essentially saying that your company is worth 100*x/y dollars.

Originally posted by cperciva
Look at it this way: If a VC is willing to give you $x in exchange for a y% stake in your company, he is essentially saying that your company is worth 100*x/y dollars.

Understood. But saying that the "standard" stake is 20% based upon an investment of a certain dollar amount doesn't make sense. Maybe as a rule of thumb, but not realistically. A VC guy wants his ROI, and he's going to look at you from nine different angles to see how he'll get it. I seriously doubt it's a cookie-cutter process.

Anyway, the top VC outfit in my area gets up to 90% for start-ups. YMMV.

Oh, another point: Media attention helps. Get onto the front page of the technology section of the NY times, and you'll probably see venture capitalists contacting you to offer you money -- which puts you into a rather stronger position when it comes to working out a deal. ;)

Greetings:

You are correct there are no cookie cutter approaches to V.C. However, the person who stated $200,000 is around 20% equity is not too far off target.

In general, $1 million or more would be 40% to 60% equity.

This is for first round.

Usually seed money is $1 million or less.

Though there are no hard and fast rules.

I would state that if some one wanted 90% of our company for less than several million (we are established now for seven years), they would be politely shown the door.

Thank you.

P.S. http://www.garage.com/ has excellent resources.