Looking for Investors for new company

I

Importer

Registered User
Messages
363
We are just about to launch a new publishing company and are looking for Investors to come on board to provide 40% of the start up capital.
Ideally we are seeking one or two experienced individuals who are capable of making a valuable contribution to the board as either executive or non-executive directors. The equity particiapation will be through non-voting redeemable preference shares.

I know there are many fee based services available for this purpose however, being a start up we are trying to reduce costs as much as possible in the initial stages.

If anyone has any good ideas on how to source investors interested in a medium to high risk start up venture We would love to get some pointers or ideas about this. If anyone else has been through this with success stories, would like to hear from you.
 
From the brief information you have given, it doesn't seem that the offering would be very rewarding. I do not think that in a high risk start-up, which most new ventures are, the participation of non voting redeemable preference shares doesn't appear appealing. Unless the shares / loan notes offer an extremely high interest coupon, I don't see much of a queue forming.

If you wish to provide further information, a further more detailed evaluation will be offered.
 
Importer if that was your reply on Dragon's Den I think you would be downstairs pretty sharpish!
If you wish to provide further information, a further more detailed evaluation will be offered.
Click to expand...
Do you want another go?
 
Importer --- is that it ???

I'm an Investor in such similar start-ups, but need more info to determine a definitive level of interest.
 
so basically you are looking for 2 people to give you €40k each in unsecured funding and in effect assist and advise you as to how the company should be run but ultimately have no say in the decision making process.??? best of luck with that, I think you are going to need it
 
MPSOX - That's correct yes

The investors will also participate fully in the capital of the company when it is sold in 5 - 10 years time. We would expect that the shares will be worth 8 to 10 times at that stage.

The investors will have a seat on the board and yes of course they will have an input to the decission making process like all directors.
They wont have any legal voting power if there is difference of oppinion on the future strategy and direction of the enterprise as this is already mapped out by the majority shareholders. We certainly wouldnt want to have a grid locked board.

We are looking for astute businessmen to come and meet us and digest the business plan and make a judgenment on what is reallly a very small investment.

Granted, This will not suit everybody. Investors will need to select us and we will need to select them.

To the other contibutors, let me assure you that this is nothing new about this concept. Venture Capitalists have been taking non-voting equity in start up enterprises for centuries. I have been involved in several myself.

Thanks for your help.
 
I wouldn't be as confident as you in relation to Venture Capitalists not taking non-voting equity in the current economic climate. Most experienced investors work on the principle that if a decision is good for the business, then it would be good for the shareholders as well.

I note that you have mentioned that this business is within the Publishing sector. A particularly difficult business unless there is an angle to it. I've been there as an investor and basically with the best content in the world, the business relies on the behest of the advertising industry to provide the paid input to move matters forward for the purpose of increasing readers and circulation.
 
Importer said:
They wont have any legal voting power if there is difference of oppinion on the future strategy and direction of the enterprise as this is already mapped out by the majority shareholders. We certainly wouldnt want to have a grid locked board.
Click to expand...
As the investor(s) will have a minority of the stock how would they cause gridlock unless the majority shareholders disagree about the future strategy and direction of the enterprise?
Why would I buy 40% of a company if another shareholder who controlled 31% of the venture effectively made all the decisions?
If I didn't have a vote I'd be looking for a dividend/ directors fee which gave me my money back over a 5-7 year time frame.
 
Guys

I have no interest in enetering a side show here about the mechanics of the voting or non-voting shares. That is definitely not the issue and its not my question to this forum.

Purple, Take a scenario of an Investor with 40,000 to invest.

1) He can invest it in a fund where :
a) He has absolutely no voting power
b) He will not receive monthly management accounts
c) He will not have the facility to attend board meetings
d) He will not have the facility to be personally involved
e) He WILL have to pay hefty management fees
f) He will not have the facility to participate in the management team
g) The returns are unsecured with medium risk.

2) He can become a minority shareholder in my company where :
a) He has absolutely no voting power
b) He will receive monthly management accounts
c) He can contribute to the decision making process
d) He can take a management role and receive salary.
e) He can attend all board meetings
f) He will not have to pay management fees of any sort
g) There will be a mechanism for exiting the investment
h) The returns are unsecured and the risks/rewards are higher.


There is always room in a well balanced investment porfolio for low risk and high risk investments but this is not what I am trying to convince you guys of.

There is no shortage of "risk takers" for this project however we will try to avoid the brokerage fees if possible. We have been in contact with a number of investment houses already with investors on tap. Unfortunately their brokerage charges are way too high.

My question remains - Where to hook up with like minded investors.
 
Importer, I will be away for the next frew days, but if you wish I could have one of my people in Cork to visit you for a discussion if you so wish. Please advise, but I am away until Wednesday morning.
 
how can you say its a small investment....especally since you seem to be stuck for it at the moment
 
Starlite

Very good question.

40,000 is very small beer. We are certainly not stuck for it. Giving away this level of equity so cheaply would raise my eyebrows also.

The thinking here is to beef up the board at this early stage with some savvy individuals (with resources) Down the line at phase 2 of the expansion / investment strategy, and after the investors have had a taste of the business and indeed tested the management, they might want to invest further. At least in other ventures I've been involved in. it has worked like this.
 

How much money have the other shareholders invested for their level of equity?
Judging from your first post this might be €60k but a non-voting share should be worth less than a voting share so can we take it that you and the other shareholders are putting in more than €60K for your 60%?
Unless I was buying into a strong new technology or one of the other shareholders had a proven track record in the sector (and a name that could bring in the advertising revenue) I would be very dubious about buying into a venture in which I would have absolutely no say. Having a minority share in a private company is of dubious value at the best of times, a share with no vote is worth even less.
I could well be wrong and you might have a silver bullet that can make you a fortune (and you will hardly reveal all on AAM) but I presume you posted here for a robust critique and well as advice. ;D
 
Purple,
Respectfully, If I had followed your logic in my own personal investments over the years I would have missed a lot of opportunities and avoided a few rotten apples....................Thought for the day.
 
Importer said:
Purple,
Respectfully, If I had followed your logic in my own personal investments over the years I would have missed a lot of opportunities and avoided a few rotten apples....................Thought for the day.
Click to expand...

I'm sure that you saw more in the investments which you made than you are showing (or can show) here. That's all I am saying.
 
You must log in or register to reply here.
Menu
Log in
Register