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When we started, we looked for investors, but couldn't find any that didn't want a majority % of the business. None of the people we interviewed had any experience with hosting, so they were bringing nothing to the table but cash. We didn't feel this was a good trade.
How much?
You can't get more then $300 to $500 through online but if you need more then $1k then contact your bank
http://www.kkr.com/ they are investing in high-tech
How about crowd funding?
how about kickstarter?
or promise<- I think this is the one where you join a community and can get offers.
The question here really is -- Do you have a business plan?
Absent a real plan and a summary 30 second elevator pitch you have nearly zero chance of getting a dollar from anyone.
As a small tech business you need to leverage upstream providers first. Renting servers is one way. Strategic partnerships with existing datacenters with excess capacity is another. Lots of servers sitting idle. More supply than demand.
That is how we started out. Got involved with a provider that created the platform we are using and just grew from there.
If we has servers sitting idle we wouldn't need an investor
I hear you @Corey. As a startup you don't have those resources. But tons of deep pocketed businesses in the datacenter space that have clouds and similar clusters sitting there doing nothing.
I'd start by looking at data facilities that have opened local to you or in target market that haven't advertised so heavily and you don't know to be used by many folks. Some of those places have different target market, but some got the funding to build it and no one came to use it.
I'd entertain short term fixed, but high rate loans from people outside the industry with liquidity. For example, lend me $1k and I pay $1.5k in net 30 or something like that.
That needs to correspond with strategic purchasing and filling of nodes to pull that off.
Create the money making idea not from an affordability based on your pocket change, but from a perspective of if you had the resources and needed to quick turnaround things.
have you thought about kickstarter.com
it's crowdsourcing. I've seen people who have raised money for their projects that way.
loans from prosper.com
Get a bank loan - Your chances of getting an investor are very, very slim.
Reason: Your business is not unique, so there's nothing stopping the investor from setting up their own VPS provider where they'd have 100%, instead of.. 30%.
Find out exactly what you need, and the exact amount of money you'll need and demonstrate it in a well formed business plan.
You'll need to prove to your bank manager that you know your stuff, and you're not going to screw up. As you're already established it should be a lot easier though.
Kickstarter and other crowdsourcing sites are nice, but not suited to this industry, sadly.
Good luck.
All I can say if you do get someone to invest, make sure they know something about the business and technology and share your values - sounds obvious but remember DMBHosting.
That depends. I would say most private businesses get funding through loans or bonds, not stock.
Your top sources for funds would be:
A loan is a type of investment. You could have it as a loan, bond, or stock. A loan you usually make equal payments over a term, a bond you make interest payments over the term and the face value at the end, and the stock you give a share of the business / profits.
Invest in talent not dreams.
VoIP active communication, good for introductions and to determine if your "talent" isn't a 13 years old, in addition passion omits from the tounge.
Folks looking for investors; have a solid idea, all bases covered..hosting costs, return profits, etc.
Helps if you've already got proof of your talents to share with a potential investor.
Conclusion; Asking for investors online is probably the first warning sign that your idea is going to fail.
The real world provides small business loans in some fashion in most places. These obtained often through your bank tend to be a bit more secure.* protip
We had no issue sourcing significant investment, but there were already established professional relationships with all of our investors.
I lease gear @ 2 years, at the end of 2 years, I can return the gear or buy it for fair market value. If I return the used gear, I can just buy a brand new server and lease again for 2 years.
Also if I need a large purchase say a few 6500 switches or some routers, I have immediate access to the capital. I just tell them who to buy it from and they set it up, and the gear arrives.
I started talking to them right before my first LEB offer, and they saved me because I got way more signups than I expected and had to get new nodes, update my routers, buy more nodes for expansion. WIthout them I would of had to save the money from profits and then buy the hardware for cash, but that would of taken much longer.
And I was able to secure a line of credit without a personal guarantee which was a huge plus.
Only downside is that you do have to have capital for the 1st and last month's payment, so if you do big purchases be prepared for it
VoIP active communication, good for introductions and to determine if your "talent" isn't a 13 years old, in addition passion omits from the tounge.
Hi Zeds I'm not asking for investors online I'm just wondering how other people manage with investors.
We've been in business for 3 years and I appreciate you generalizing that we are going to fail.
Very interesting, thanks for sharing FRCorey!