[LRUG] Funding a start-up?

David Upton david at upton.cc
Fri Jan 12 00:25:02 PST 2007

I agree with Benjohn's advice. If you can do it without external funding,

VC funding is not always the easiest option, for two reasons:
1. with the funding comes a joint owner of your business who has his/her own
ideas about what you ought to be doing. (These may be wise and valuable, but
often aren't.) Also there's a whole lot of legal stuff, restrictions on what
else you can do, etc.
2. the VC expects to earn a big return, so there is far more pressure on you
to earn money quickly. A project which might do well after a slow start may
instead be killed off before it has a chance. In other words, you raise the
stakes. If you do very well, fine. If you only do moderately well, you may
still have the plug pulled beca\use you aren't meeting their rate of return

Don't borrow from the bank: this loan has to be secured against something,
so if you go that route and don't succeed, you may lose your collateral.
Don't borrow from friends and relations, unless they've got so much money
they won't mind if you lose their investment. At least if a VC investment
fails, you just walk away from it.

Good luck!

David Upton

----- Original Message -----
From: <benjohn at fysh.org>
To: "London Ruby Users Group" <chat at lrug.org>
Sent: Thursday, January 11, 2007 5:18 PM
Subject: Re: [LRUG] Funding a start-up?

> I've a couple of killer Ruby projects in need of some start-up
> funding and I don't know where to start looking so if anyone here's
> been down this route and can offer any advice I'd love to hear from
> you :)

My experience is that people fund you when:

  1) You are obviously going to succeed anyway because you already are,
but they can help you get there a bit quicker, or get up to "the next
level", or

  2) You're in the right place at the right time and meet the right
person with the right connection and right level of drink lubrication,

Basically, just do it, as quickly as possible, and get it out there. If
it's good, it might do well. If you're anything like me, what you need
more than cash is someone else who also thinks the idea is good, and so
will keep your enthusiasm topped up.


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