Is there such people as "short term" venture investors? Ones with less strings per say?

I'm in the process of starting a software business (plugins for software, actually) and obviously I need need mone. Everything I've read about venture investors seems like a pretty permenant situation. Are there people out there that may be investing in smaller amounts that are just looking for an initial return (1-3 yrs) and not stuck on a long- term profit? If so, where would you find them? To put it plainly, I need someone to invest money, but in the end I don't want to be sharing the company? Are there people possibly new to investing that are looking for a similar deal? Thanks for your input.

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March 09, 2008

Posted by bahellman

4 stars ( 1 rating )

Have you taken a look at The Funded?

"TheFunded.com allows entrepreneurs to research, rate, and review venture capital sources worldwide."

the funded as a resource will allow you to research various contact rates and see if there is one within the length you desire. I'd be interested in hearing what your learn.

March 27, 2008

Posted by stevelup

4 stars ( 1 rating )

Actually, yes there is a short term "investor" - its the Small Business Administration (SBA).

If you raise Venture capital, the Venture firm is an owner in your business just like you. You can offer to buy them out later, but if the business is doing well, you'll have to pay dearly and where will you get the money?

Getting a loan from the SBA, while not actually investment, can fund your startup and be paid back when you have the funds. They will charge you a substantial interest rate and require collateral such as your home, but that is much, much cheaper than giving up some of your ownership.

Its a double benefit, because, if you're successful, your business' value or worth will increase every year. This means that when the loan comes due, if your lucky, then you can raise capital to repay it but you'll be able to get more money and give up much less ownership as the company's value increases.

Comments

bahellman: Great post Stevelup. When you say the SBA will charge a substantial interest rate, what range are we looking at?
stevelup: There are different rates for different types and maturities of loans. Both Wells Fargo and B of A websites have web pages with a pricing grid, typically in the 8% to 12% range.

One important point I neglected to mention was that the SBA loan has to be paid back even if the business fails. An investment from a Venture firm generally does not have to be paid back if the venture fails. Therefore while the SBA loan is a good way to keep a partner out of your pocket, it does have its risks.
bahellman: great points, Thanks Stevelup

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Is there such people as "short term" venture investors? Ones with less strings per say?

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