perfectmatchproperty started this topic @ 18:14 on 19/06/2007
Hi All
I'm looking for some advice on what might seem like a silly question but one that has me and my partner stumped at the moment.
We have a web based business idea. We plan to put hours into the business on a part time basis until we have generated enough funds to make the leap to full time. My partner and I do not have funds to invest ourselves at this point.
A web developer who I have worked with many times in the past has offered to build the site and be responsible for ongoing maintenance in exchange for an equity stake in the company. The Value of the build is £8-£10k
We also have a family member who can invest some money (in exchange for equity) to get us started £15k (which is enough to cover Q1 & Q2 marketing costs plus the very small home based running costs) The family member is also able to work for the company on a part time basis initially, with the view to going full time in Q3.
All parties are willing to plough the revenue back into the company in the initial stages to grow the marketing budget and make us a full time business at the earliest opportunity.
The question is how do we determine who gets what equity and at what point do people get paid?
RE: Accepting investment into a start up business
James Smith | 19/06/2007 06:34 PM
Its always a haggle.
All I can really say is the point at which all parties feel they have got an ok deal but not great is the point at which its about right. If anyone is grabbing with both hands you have given too much away!
Play around with what seems fair/ grossly unfair to each party and you will narrow in on what is workable.
In these sorts of circumstances getting a very good partnership plan upfront is essential.
Regards,
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James Smith
Chartered Accountant
www.jamesesmith.co.uk
01235 536 773
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Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT
RE: RE: Accepting investment into a start up business
itrends | 20/06/2007 09:38 AM
Would you mind sharing at least the basic deatils and functions of the site as that amount of money seems VERY high for a site build. I should know, I have been in the game for years doing with for FILMFOUR, Disney and others.
15k+ is a full bespoke ecommerce store with back end system and links to a pacs or shipping system and probably a PAF post code finder etc.
So, you can understand my interest. Mainly because I would hate for you to be spending this huge "london price" budget on something that you could get for a few hundred quid which could easily be covered by a credit card.
Plus, 9 times out of 10 there is an open source free set of software which you can pay a developer to make adjustments to in order to get what you want.
Very keen to learn more from you.
Regards,
David
RE: Accepting investment into a start up business
itrends | 20/06/2007 09:42 AM
Oh and as for marketing. What on earth are you spending on? In the initial stages some high quality flyers, business cards, and clever magazine placements should be more than enough for offline activites. With regards to online, an adwords campaign and some strong organic SEO (search engine optimisation) work should be great at getting business in with little cost. There is no point spending money like that on marketing until you have a user base and some "trust" or "content" etc whatever it is you need, otherwise you are paying for people to come along and go "ooo, not much here, lets go somewhere else". Just because your name is in lights everywhere does not mean you will succeed. Check the techcrunch deadpool online for a nice sampling of failed web startups for these very reasons.
The key is, the less you can borrow, the better off you will be. For example, going on your name, I think you may be a property website? Where people can buy, or sell, or view properties etc? If so, the price quoted is high, and there are thousands of competitiors you will be up against. I wont go into more detail now just in case I am off the ball.
Feel free to mail me or reply hear with details and questions 
Cheers
David
RE: RE: Accepting investment into a start up business
perfectmatchproperty | 21/06/2007 04:02 PM
Hi David
Thanks for your replies - much appreciated. I should have given a little more background. The £10k comes from a top end design (Mike Rundle, 9rules, Basecamp etc), fully bespoke back end which allows real estate agents to feed and upload property details. There is also a big community aspect to the site. Forums, customer reviews etc.
Also included in that estimated £10k is the management for the 1st quarter. Managing of feeds, building of emails and other regualr management. 20-30hrs per week.
As far as the web dev goes, I am completley happy with the figures as I have been working with the chap for many years now. I currently head up the Web Dev & Marketing for a leading Property Company.
As far as marketing goes the £15k is a combination of Targeted email and SEO work. Due to my current position I am able to nail down a pretty acurate ROI where this is concerned. We will work with Nick Wilsdon on the seo side of things. PPC is not something I will consider at the moment as the ROI is way, way lower than targeted email in our industry.
I really do need some help with the setting up of the shareholders in the company. This is the area I am green on at the moment.
RE: Accepting investment into a start up business
emplaw | 20/06/2007 07:06 PM
Shareholder's agreements need to be in place to ensure the investment is protected as well as your business. Email us for a quote and some free information on the best way to set up a business for investment.
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Lee Schwartz Lime One Ltd www.limeone.com 01244 852550
RE: RE: Accepting investment into a start up business
perfectmatchproperty | 21/06/2007 04:55 PM
Originally posted by: emplaw
Shareholder's agreements need to be in place to ensure the investment is protected as well as your business. Email us for a quote and some free information on the best way to set up a business for investment.
great - I'll email you
