ASK Hn: Funding a "small" startup in London
10 comments
Firstly, this is not financial advice, I'm not a vc (I am a business coach, fwiw) etc. See these as generalisations, not guaranteed cases for any individual situation (such as your startup).
As a general guide, Banks won't lend money against a start-up business. The business is not a secured asset at this point. For £20K, you may be able to get a loan against other assets you have (such as a house, though if you've just arrived you probably forgot to pack one of those) or even an unsecured personal loan (more difficult, particularly up to £20K, and I've just experienced my own no-credit-history fun having moved to London so I know there aren't many organisations or banks with lazy cash to splash around).
Start-up seed funding is often called the 'Friends, Family, and Fools' round. Since £20K is a small amount (compared, of course, to bigger amounts), it may be possible to borrow it from friends and family who know and trust you, or 'fools' who don't know you but decide to trust you anyway. This is, generally, your best bet for amounts of this size. You mention looking to gain contacts - is it possible to leverage the contacts you already have?
Finally, in regards to taking investment from someone who is an investor. They will probably want to see a business plan - more specifically, what are you going to do with £20K? I'd say your lifestyle will be different to mine (I have, for instance, an international mortgage and a beautiful wife to part-fund) - it costs us just under £5K/month to live reasonably well in London, and a single in a shared flat could probably get by for £2K - do you want £20K so you can live for ten months, or is some of that specifically earmarked for marketing, training, software programmes etc? It may be easier to find an investor for slightly more money, if you have some specific investments planned, than for a smaller amount designed solely to rescue you from 9-5.
Once again, these are all generalisations. You already have the web startup created and a couple of products - that may be all you need, with the right introduction, to progress. Oh - I'm always happy to make time for coffee to discuss - see my profile for contact details.
As a general guide, Banks won't lend money against a start-up business. The business is not a secured asset at this point. For £20K, you may be able to get a loan against other assets you have (such as a house, though if you've just arrived you probably forgot to pack one of those) or even an unsecured personal loan (more difficult, particularly up to £20K, and I've just experienced my own no-credit-history fun having moved to London so I know there aren't many organisations or banks with lazy cash to splash around).
Start-up seed funding is often called the 'Friends, Family, and Fools' round. Since £20K is a small amount (compared, of course, to bigger amounts), it may be possible to borrow it from friends and family who know and trust you, or 'fools' who don't know you but decide to trust you anyway. This is, generally, your best bet for amounts of this size. You mention looking to gain contacts - is it possible to leverage the contacts you already have?
Finally, in regards to taking investment from someone who is an investor. They will probably want to see a business plan - more specifically, what are you going to do with £20K? I'd say your lifestyle will be different to mine (I have, for instance, an international mortgage and a beautiful wife to part-fund) - it costs us just under £5K/month to live reasonably well in London, and a single in a shared flat could probably get by for £2K - do you want £20K so you can live for ten months, or is some of that specifically earmarked for marketing, training, software programmes etc? It may be easier to find an investor for slightly more money, if you have some specific investments planned, than for a smaller amount designed solely to rescue you from 9-5.
Once again, these are all generalisations. You already have the web startup created and a couple of products - that may be all you need, with the right introduction, to progress. Oh - I'm always happy to make time for coffee to discuss - see my profile for contact details.
Thank you for the excellent advice, and know my post was quite general, but you've hit the nail on the head with your comments.
I would love to meet for a coffee sometime - will be in touch. P.s. I'm a kiwi!
I would love to meet for a coffee sometime - will be in touch. P.s. I'm a kiwi!
P.s. I'm a kiwi
Nobody's perfect.
(Actually, I'm enjoying the fact that on this side of the world we're best friends, not mortal, sheep-tossing enemies.)
Nobody's perfect.
(Actually, I'm enjoying the fact that on this side of the world we're best friends, not mortal, sheep-tossing enemies.)
I'm an italian erasmus student in London, I live in the east end (good place for startups) for 300£ per month in a nice double. Totally I need ~900£ to live well (good food, pubs and discos).
Bit of self publicity: I'm looking for young startups in the area. I'm the author of hackurls.com and I'm following other web startup-like projects. Honestly I'm a competent and passionate programmer (git pyhthon django mysql mongodb java..). Feel free to contact me at vuotomeccanico on gmail.
Bit of self publicity: I'm looking for young startups in the area. I'm the author of hackurls.com and I'm following other web startup-like projects. Honestly I'm a competent and passionate programmer (git pyhthon django mysql mongodb java..). Feel free to contact me at vuotomeccanico on gmail.
Just to note, I live in central London (as in Zone 1), on around £1500 a month quite comfortably. £2k a month is excessive
That's cause your in zone 1 as you've said. You don't have to pay for an expensive travelcard :)
Great data point (I was actually going to ask for one, but it would have made my point a little unweildy). I certainly do live a pretty good lifestyle, plus some good debt (eg, my share of rent + mortgage is almost 1500 a month).
quite comfortably? What sort of house do you have? :/
Same here. I might be easily more frugal than the average, but I definitely have everything I need for around £1500 per month.
Do you really need to live in London? If we're talking the classic example here of ramen profitability, you can do that for about half as much cash by moving out along the train lines and commuting in when you need to. I'm about an hour from the city by a relatively reliable rail service, and weekly season tickets really aren't that expensive.
Any reason not to keep going as you are? Or, perhaps you could request to reduce your work time to 50%? This can be tough to do, but many places would rather negotiate than see you just walk out.
Funding yourself (with job, contracts, etc.) is rarely discussed here, but it's a much more reliable way to get money than seeking investment. It's tough to find the time balance, but there's something to be said for having a basically endless runway.
Funding yourself (with job, contracts, etc.) is rarely discussed here, but it's a much more reliable way to get money than seeking investment. It's tough to find the time balance, but there's something to be said for having a basically endless runway.
>but there's something to be said for having a basically endless runway.
That you never have any motivation to take off?
That you never have any motivation to take off?
Sure, feel free to jump ship and go for it. Just make sure you've got more than 3 months saved up. Real businesses take time to build.
>Real businesses take time to build.
Word. But, time/money constraints can be a great motivator.
Word. But, time/money constraints can be a great motivator.
Your best bet might be to apply to seed accelerators for that amount of money. £20,000 seems an odd amount of money to want to raise, accountancy and legal fees will probably eat up a decent chunk of that, if you're going after angels it might be easier to raise a large amount. What's your plan for spending that money?
How far developed are you products and what markets are you working in? - if you're in the b2b space another option might be to approach potential customers and see if they're willing to finance you (or even if they can provide an letter of intent saying they intend to buy your product; you may be able to use that to get a bank loan).
Another option could be to become a contractor for a while, 20k isn't a huge amount of money, you could easily earn that much money in 3-6 months (if you take payment through your company and re-invest it in your startup products it also means you won't have to pay any tax on it).
How far developed are you products and what markets are you working in? - if you're in the b2b space another option might be to approach potential customers and see if they're willing to finance you (or even if they can provide an letter of intent saying they intend to buy your product; you may be able to use that to get a bank loan).
Another option could be to become a contractor for a while, 20k isn't a huge amount of money, you could easily earn that much money in 3-6 months (if you take payment through your company and re-invest it in your startup products it also means you won't have to pay any tax on it).
You could probably try getting started by reaching out to some EU-focused angel investors - there's quite a few in london.
I keep a list on Twitter with a few who are active: http://twitter.com/#!/list/f/eu-angels There's also AngelList for Europe here: http://angel.co/europe
There are also other options. Since you're aiming for 20k, which is not a high amount, you may want to try the 3 f's first - Friends, Family, Fools. A personal loan might work too. It boils down to how much risk you're willing to take. (I'd go with angels first, because investing is what they do and they can help you more than just providing you with cash.)
I keep a list on Twitter with a few who are active: http://twitter.com/#!/list/f/eu-angels There's also AngelList for Europe here: http://angel.co/europe
There are also other options. Since you're aiming for 20k, which is not a high amount, you may want to try the 3 f's first - Friends, Family, Fools. A personal loan might work too. It boils down to how much risk you're willing to take. (I'd go with angels first, because investing is what they do and they can help you more than just providing you with cash.)
why not get a 3-6 month contract, live normally, then use the surplus as runway funding? contracting rates in london are normally pretty good.
that way, you don't risk financial ruin, and you can bootstrap yourself.
(i did this succesfully over a period of 2-3 years, while not London I am UK. pm me if you like!)
that way, you don't risk financial ruin, and you can bootstrap yourself.
(i did this succesfully over a period of 2-3 years, while not London I am UK. pm me if you like!)
HN doesn't have private message functionality and you don't seem to have any contact details in your profile.
Is there any other way of contacting you? =)
Is there any other way of contacting you? =)
Hi all
I use this address for gtalk IM only (don't mail it) .. so I dont mind if I get spam from sharing it here! Feel free to add me anybody, but remember I work a 9-5 and cant chat heaps during the day
[email protected]
Cheers Alain
I use this address for gtalk IM only (don't mail it) .. so I dont mind if I get spam from sharing it here! Feel free to add me anybody, but remember I work a 9-5 and cant chat heaps during the day
[email protected]
Cheers Alain
You could apply to http://springboard.com/. It's a startup accelerator in Cambridge, which is a little cheaper than London and only an hour away by train if you ever do need to be there. Application deadline is this Sunday I believe, so ideal timing ;-)
I'd love to chat. I may not be your 'fool' (see other comments) but I may know some. I'm based in central London. I have some contacts.
One day I'd like to be making investments like this (he says, not really knowing what you're planning to do).
Can you share more info privately?
One day I'd like to be making investments like this (he says, not really knowing what you're planning to do).
Can you share more info privately?
Yes absolutely, I'm just at work at the moment, but will send you my contact details (email + instant messenger etc) tonight, cheers :)
Why don't you make some thing you can make money from, then invest your own money in the start up idea?
Either that or do I did and keep a full time job and work evenings and weekends until your startup matches your salary.
Either that or do I did and keep a full time job and work evenings and weekends until your startup matches your salary.
I am a potential fool but would like to find out (a lot) more. I work centrally and live slightly north. Drop me a message and we'll chat.
Hi there
Cool let's chat :) email me on [email protected] and I'll send you much more info
Alain
Cool let's chat :) email me on [email protected] and I'll send you much more info
Alain
I have just arrived in London and have created a web startup - I have a couple of products that I think can generate income, but am focusing on the strongest one first ... I am looking for funding to quit the 9-5 job and concentrate on the main product. The funding I am looking for is about 20,000 pounds ... can anyone point me in the right direction? I am unsure if I should look for an investor to gain contacts etc, or if I should approach the banks for a loan? Any comments and advice appreciated!