Raising Venture Capital - What You Need to Know

[Mark Harbottle]

These comments are in regards to the SitePoint.com article 'Raising Venture Capital - What You Need to Know'.


I don't agree with the idea of informing people to fund their new business venture with their credit card. This is a sure fire way to end up in trouble. Sell your car or your sisters DVD player or something, but don't get into the highest possible debt to fund a high risk venture!

[Jeremy W.]

While I see Mark's point, the reality is that so many companies have been started by this very method. Sure it's high-interest and isn't for the faint of heart but it's all about balancing passion and wisdom.

If you are making an informed decision and really believe this is the path, it may not be the recommended way (or for most people even a valid way), but it will enable you to stay on target because you are using the resources available to you to get the job done.

That said though, the 2-10K most people have on the Visa's ins't really enough to finance all that much really, especially when most business prequalify for a 10K loan with most banks at a much lower interest rate

[M. Johansson]

Now, I only skimmed the article, so I might just be overall confused, but what does this article do on Sitepoint, which is a site targeted at webmasters and web developers?

I mean, it's not like a web site or a web development business needs some serious ventrue capital at all. A couple of hundred bucks, sure, but not several thousands of dollars.

I don't get it.

[Jeremy W.]

I nearly pitched to 300 angel investors last year for 10-25M.

The varying levels of expertise and vision mean that it is actually unlikely that someone isn't considering getting VC's to help out.

Whether that is for millions or just thousands the principles really are the same

[aspen]

I agree with M. Johansson, and I also recently mentioned this very thing in an email to Mark. By and large the majority of SP's audience is small independent web publishers or web developers.

[Hierophant]

If you read the article though it starts with Self-Funding and other means of raising the limited capital you need to get started.

However if your idea takes off and your business grows to a certain point, it gives further direction on how to get more funding. Granted, nine out of ten people will never get to the Venture Capital stage but providing some basics on how to get there might just help that one person who needs it. Since it really doesn't cost anything to publish these business oriented articles, they don't hurt anything.

For the web developer there are three or four articles published for every business related article. You probably do not need it now but it might be very handy in a few years.

[tdev]

I think it's a valid article to have on a site like this ... I'm as interested in the "other things" this site offers such as business tips/marketing/promotion/etc than just straight development info ... that's why I keep coming back because of the variety of info.

And like Jeremy W. and W.Luke indicate, this is info that is scalable and any developer should know or at least be aware of ... a sound business sense is the missing ingredient I find in most small development companies and probably the reason why most fail ... because whether it's IT or any other industry, it's usually a person's or company's business savvy that makes them successful more than any innovative product development, though this certainly helps.

[Technosailor]

I believe it was Winston Churchill who said that those who think small are doomed to failure. If you never want to become a larger organization and never strive for it cause you feel doomed to smallness, then you will always stay at that level. Articles like this should challenge all the freelancers and indies out there.

sKetch

[M. Johansson]

Originally posted by Sketch
I believe it was Winston Churchill who said that those who think small are doomed to failure. If you never want to become a larger organization and never strive for it cause you feel doomed to smallness, then you will always stay at that level. Articles like this should challenge all the freelancers and indies out there.
sKetch

First of all, I would like to clarify that I love the business related articles on Sitepoint - they are my favourites. It's just that Sitepoint at the moment has an enourmous amount of articles, which overwhelms me whenever I start reading them. Maybe this article is good for motivational purposes - I dunno. I can't even fathom what the heck I'd use any ventrue capital for, really. I guess I just don't want to be big.

[Hierophant]

Originally posted by M. Johansson


First of all, I would like to clarify that I love the business related articles on Sitepoint - they are my favourites. It's just that Sitepoint at the moment has an enourmous amount of articles, which overwhelms me whenever I start reading them. Maybe this article is good for motivational purposes - I dunno. I can't even fathom what the heck I'd use any ventrue capital for, really. I guess I just don't want to be big.

Who says that you have to go big if you look for financing. Maybe you only need $10,000 dollars to finance your business while it gets going. You can still get outside investment for that.

[aspen]

One thing I suggested to Mark was to split SitePoint. Keep all the web stuff on sitepoint and move the general business stuff to a new site, BizPoint

[petertdavis]

I'm working with a company that's done a lot of financing on personal credit cards. And I mean tens of thousands of dollars. To the point where if the business goes bust they'll be filing bankruptcy.

They have a great product, in a very tough industry. They're working their tail off, and believe in what they're doing beyond question. It's definately not for me, and I work for them at a (somewhat reduced) hourly rate.

To them it was a question of letting their dream die, or funding it with credit cards. They've had investors here and there, some of whom have bought in. It often has an undesireable result, though. Some investors can be more trouble than their worth. Now they know that.

So, the answer to whether anyone should fund their startup with credit card debt is always going to be 'it depends'. Sometimes when you realize the alternatives, it really is a good choice.

[Mark Harbottle]

We are thinking very seriously about focusing only on development content. WebmasterBase.com is about 8 times more popular than eCommerceBase.com and PromotionBase.com.

So if you like this content so much, how come only a small percentage of our total visitors read it?

Mark.

[Jeremy W.]

Guess that puts me out of a writing job

[georgina]

No way J!

You're not getting off that easily!
georgina

[Eric.Coleman]

Alot of the stuff I find on ecommercebase, and promotion base I don't understand.

One task I am hit with now, is building a site to sell a product. I have no idea where to even being. Im a programmer, not a marketer, and im just totally lost.

If there is a tutorial somewhere that I'm missing, I would appreciate it if someone could point me to it.

Thanks,
Eric Coleman

[georgina]

Hey Zaire,
What specifically are you after?

We have a lot of information on building an site to sell products, and enabling it to accept online payments in our eCommerce section at http://www.ecommercebase.com/subcats/69

Hope this helps,
georgina

[Eric.Coleman]

We already have the ability to accept credit cards and checks online.

Let me give you a bit of a backgroun on our product.

We are developing a next-generation CMS written in PHP. We are nearing completion, and would like to get started on the site, so we can get marketing.

I would just like to know what type of stuff I need to start with. We already started a bit, and this is all I have been able to come up with on my own -> http://sitemod.net/beta/

Thanks,
Eric

[Arkham]

Originally posted by M. Johansson
Now, I only skimmed the article, so I might just be overall confused, but what does this article do on Sitepoint, which is a site targeted at webmasters and web developers?

I mean, it's not like a web site or a web development business needs some serious ventrue capital at all. A couple of hundred bucks, sure, but not several thousands of dollars.

I don't get it.

Don't forget that the majority of people getting into the net and web design have dollar-signs in their eyes, and since SitePoint is a major webdev hub, it follows here. People want, people get.

It's the endless struggle between Art and Business...

[Arkham]

Originally posted by aspen
One thing I suggested to Mark was to split SitePoint. Keep all the web stuff on sitepoint and move the general business stuff to a new site, BizPoint

...All praise Aspen.

Great suggestion.

[Aonghus]

Originally posted by W. Luke
Maybe you only need $10,000 dollars to finance your business while it gets going.

Only $10,000?! Most web design/development businesses could be started for the price of a pc, an internet connection, and a coffee maker

[hstraf]

Originally posted by Mark Harbottle
We are thinking very seriously about focusing only on development content. WebmasterBase.com is about 8 times more popular than eCommerceBase.com and PromotionBase.com.

So if you like this content so much, how come only a small percentage of our total visitors read it?

Mark.

Hi Mark,

I'm not sure how you track your stats, so this might be way off... but I'd venture to guess that the developer area would show a lot more traffic because it's very nature means it will be a place for repeat traffic by the same people. ie: Most people probably read an article or whatever several times, because it is technical and needs to be digested slowly and over and over again.

Business stuff, on the other hand, is likely to generate some interest, but then most readers will simply go, "Huh." and then never return to the article (or whatever).

I hope that makes sense. Basically, we geeks are more easily attracted to the geek stuff because it's geek stuff. The business stuff is a necessity, and most people visit it only because they have to, or find it interesting (but not as interesting as the true geek stuff).

Cheers!

[aspen]

Thats a good point. When Kevin's article (you know the one) was still around I would visit it all the time, because I was using it as a code reference.

[Hierophant]

Originally posted by Aonghus


Only $10,000?! Most web design/development businesses could be started for the price of a pc, an internet connection, and a coffee maker

Who said I was referring to starting a Web Design business? Personally, I don't think there is a lot of money in web design. Sure you can live comfortably but it isn't were the money will be. Recurring sales are few a far between. Not only that you have to work hard to make sure that you continually get work.

In my experience the money is in supplying automated services with recurring payments or through sound retail practices where you only have to ship products to customers and maintain inventory. With $10,000 dollars, I can purchase at least $50,000 in inventory. Probably more because the mark-up on some of the items I sell is 600-900%.

[M. Johansson]

Originally posted by W. Luke
In my experience the money is in supplying automated services with recurring payments or through sound retail practices where you only have to ship products to customers and maintain inventory. With $10,000 dollars, I can purchase at least $50,000 in inventory. Probably more because the mark-up on some of the items I sell is 600-900%.

Why, that it just great. You posting that stuff 15 minutes before I go to bed. Now my beauty sleep will be defiled by my brain making up cunning business schemes.