Smart money

Discussion in 'Growing and Managing a Business' started by Bradi, Oct 27, 2013.

  1. Bradi

    Bradi
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    Hi,

    Recently I have been working quite hard to raise investments in a start-up I intend to establish. The endeavor is based on a patent pending I registered. (not yet published on the USPTO).

    A week ago, a man called me, willing to invest the sum I requested.

    The main problem is that this man had no understanding in any technological field and is not familiar with basic technological terminology. He is in the food business on a multimillion scale. Obviously he knows how to run a successful business, yet he sounds like someone with poor schooling.

    I must admit that I'm very tempted to accept his offer, but I fear the involvement with non-smart money that might bring major obstacles in the future.

    I will be grateful for any useful advice.

    Brad
     
  2. Fergal

    Fergal
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    Welcome to Business Advice Forum Bradi and thanks for posting your business questions.

    Have you spoken to this potential investor about the role he may have in the business, should he make an investment? Is there a possibility that he wants to be a silent partner, who invests in the business and gets a return from that investment, without actually participating in the day to day running of the business?
     
  3. Bradi

    Bradi
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    Thanks for your wise ideas.

    Yes, I did speak with him about his role and my impression was that he was not able to understand the market and the time-frame of SW development and when to expect revenues. He said that he read only the financial part of the business plan and was impressed by the market size (21 billion). I tried to grope and see if he is willing to act as a silent investor and he said that he wants to be involved... Unwilling to stretch the band too strongly, I asked him to call his lawyer and tell him to call mine.

    Perhaps through my lawyer I might see if things can be hedged in understandable way that will make him either a silent partner or at least productive investor. Perhaps if he hires an expert to be his representative, it will satisfy his involvement in the business and make his investment smarter.

    Any other advice or thought is most welcome.
     
  4. amwarner

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    "Obviously he knows how to run a successful business, yet he sounds like someone with poor schooling."

    I don't think it's right to judge that person just based on how he sounds. How a person sounds or talks has nothing to do with their ability to run a successful business, which you said this person has and is doing. There are many people who invest in businesses that don't necessarily have to or want to run it. They're primarily silent partners like Fergal stated. But based on what you said, that's not what this person wants to be and they want to be involved. Hmm ... it's a very tough call because he has the money that you would need but he knows nothing about your business. Is there any way you could find out what resources he would be able to provide you with if he insists on being a part of it?
     
  5. Bradi

    Bradi
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    I totally agree about not judging


    I totally agree about not judging. He is a nice man and knows his ways very well in his own business grounds.
    The point is that the gap is pretty much on a preliminary communication level.
    My lawyer asked his lawyer to appoint an expert on his behalf, but he wasn't willing to accept the idea. From what I heard he said that he knows his ways in business and that should be good enough.
    Last week I decided to pass this option.
     
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  6. Fergal

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    Thanks for your reply and update Bradi. Hopefully you will have other opportunities soon.
     
  7. amwarner

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    Have you considered going to angel investors or even look to your government and see if they give out grants. You'd be surprised how much money some governments give out for new entrepreneurs.

    Or even something like http://www.fundable.com/ or any crowdfunding place that could help you with investments. Good luck in your quest.
     
  8. Bradi

    Bradi
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    Thanks, Yes, I filed a request, passed the first stage and I present on Dec 10

    My chances aren't so bad because I never received crowd-funding before.
    It is great money because it is a 100% bonification. They run strict professional supervision, yet they do not put any business conditions.
     

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