Pretty simple. If a venture capitalist noticed your biz, liked what he saw, and wanted to inject some investment capital into it, would you accept it?
How would you feel about it?
Would you jump on it, turn it down instantly, or accept it under specific conditions?
What would you do with, say $10k or $20k or $50k of someone else’s money?
I wouldn’t personally. Only because i think it is easier to just save up that amount of money in a service business rather than complicate things by taking someone else’s money.
However, if I was to take the money, I would invest in adding another service with accompanying equipment and initial marketing campaign.
Same here. But I’m rather risk-averse - I’d rather grow slow and steady with my own money, than risk someone else’s money in the hopes of faster growth. And tbh, I’m not sure what I would do with a sudden injection of money, that would actually translate to increased profits. I’m in the unique (well, maybe not so unique) position of already making as much as I want to make. Any investments I make in the form of marketing or equipment will be to increase my net hourly rates so I can work less.
But I am curious about the particulars…
How much equity is he/she looking for in return?
I realize I didn’t answer any of your other questions:
I’d be quite flattered. And a little dubious. I honestly don’t think of my biz as a worthy investment (from an investor’s perspective, not mine). More of a “means to an end”.
[quote]Would you jump on it, turn it down instantly, or accept it under specific conditions?
[/quote]
If I were to accept any capital, it would likely be from someone I already know, and in the form of a loan. As much as I don’t like borrowing or lending money with friends, it’s the only source I can think of that might actually work out. (But then again, I don’t really know of any friends with that kind of cash lying around)
[quote]What would you do with, say $10k or $20k or $50k of someone else’s money?
[/quote]
$10k - Upgrade PW’ing setup, and put some $$ into aggressively marketing that service.
$20k - Same as above, plus get a new(ish) vehicle and outfit it
$50k - I have no idea… I guess I tend to think small, lol
Jan 9, 2016? Not a chance.
“Where were you years ago when I could have USED you, dude?!?”
Years (that probably match their age) of legwork on my end?
“Too little, too late.”
Incidentally, ‘no offense’ to THEM, I’d politely thank them for their inquiry, but…
I’d gladly ‘hook them up’ with my "January Angel Interest Discount"
Saving them 20% from my inflated 120%, ‘random Tuesday’ rate.
I would bet long term it would hurt your business taking it. Its way to easy to make mistakes and poorly invest money that’s not you’re own. Then you have some ongoing financial obligation to them.
I would be very hesitant. Like most other have said so far i believe it would end up hurting you long term.
With that being said if you owned a “product”
not a “service” company i may nibble on the idea a little more, especially if it was an investor lets think here…like a “Shark Tank” investor. 
I’m kind of surprised at the responses.
i try to think of it from both sides, the investor’s side and mine. ie.,
Investor: “i have $50k to invest, i require a 30% return on my investment at the end of 24 months. i like your model, your business consistently generates profit. here’s $50k growth capital. i want $65000 back in two years. make it happen.”
Me: “can i turn $50k into enough new revenue to generate $65k in profit in two years? i think i can. then, at then end of the cycle, i’ll have considerably grown my business and the profits the new revenue generates will be all mine going forward.”
the more i look at business building the more i come to a simple conclusion: the single biggest difference between the guys who stay small and the guys who grow is the willingness to take on risk.
I see whar your saying if i was a Newbie i wouldnt do it . If your at a point were you have been in business for quite some time , and have the knowledge, and marketing know how then maybe .
Quite soine risk though
So What are you going to do with my Money ?
I’m trying to conjure up reasons as to why a venture capitalist would want to loan you money. If you don’t know the guy, and he/she doesn’t know you or your credit score, something is fishy.
If I had that kind of money laying around, I wouldn’t invest in a service company simply due to the potential volatility of the industry. Do you know what piqued his interest?
If i could like this twice…I would have Mike!
Well my brothers company that he worked for had a venture capital firm that wanted to buy them, and that’s actually what they specialized in was service companies. However, my brother works at a commercial plumbing company with 4 locations and over $15M in revenue a year, so a bit different.
I think this scenario could really apply if you are a franchisor selling franchises. I think it could make sense in that context for window cleaning.
first of all, what’s a credit score have to do with it?
i don’t think it’s farfetched to see why a small local investor might want to invest in a service biz. well run service businesses consistently produce predictable profit. that’s exactly what investors are looking for.
also, i don’t view the service industry as volatile at all. in fact, totally the opposite. good service companies can stay profitable regardless of the economic climate. sure, there will be ups and downs, but it’s not like trying to run a tech startup or trading in futures.
there is no “he”. the question was just for conversation’s sake. i was asking myself the question after reading some stuff and just wondered how you guys would answer. maybe give me some new ideas or angles to ponder, that’s all.
I am in NO way speaking/answering for him…
But as I read the post, I took it more like “who is this guy?”
And why is he offering you money without knowing details of you or your company?
We are all in our own head, imagining different times/points in the scenario.
For some it may be “hey, I got this guy, he’s looked through my books and is dying to get on board.”
For others it sounds like “hey, this guy called me and said he wants to invest in my business, but asked that I repay him in pre-paid credit cards.”
Depends on what you consider a “service.”
I’ve seen Food Trucks get deals, there was a great Halloween/Haunted Hayride girl who got 2 million.
I think there have been some dog walking type “service” services…
I watch for the good clean fun of the show.
But I do like the “change your life,” “nobody has thought of this until now” inventions people come up with.
Would I take 10k-50k to grow my WC business, no .
Would I accept 2 million to start a real estate flipping business , maybe .
I guess it comes down to if I have the money . One thing is for sure, I don’t have 2 million $.
So 4 years ago, I invested in a residential cleaning company. They were in over their head and needed $5000 to make payroll, cover taxes, and my friends had their household expenses to worry about. They asked me for a loan since they couldn’t get one from a bank. We were working in the same neighborhoods and had some mutual clients. Instead I invested 7K into his business. Helped him out with some client acquisition, did some make shift marketing, and a few introductions to property managers. In return I receive 5% of the ticket sales funds capped at $250 week, and 5% of the company profit.
Year 1 $2400 + $250
Year 2 $3750 + $800
Year 3 $8500 + $800
Year 4 $12000 + $1000
I have no idea if those are good or bad for me as an investor, but I do know, I don’t work any harder for them, as I did when I wasn’t on their payroll.
But we grew the company from a $35000 a year cleaning company, to a $250000 a year janitorial/cleaning company. With room to grow. And think they are doing better than I am with my company. Ha
I would jump on another opportunity like this again. But my “expertise” is in the service business, hospitality background, with a few local high end connections.
