Posts Tagged ‘funding’

Small Business Funding: Tarp Banks, Goldman Sachs or Powerball?

Friday, December 4th, 2009

We’ve posted earlier about funding a start-up, talking about whether to get venture or angel investment, or self fund.  So, if you go the self-funding route, small business owners face a question of dipping into their savings or seeking a small business loan.  But is that really a choice for small business owners?

A recent article examined small business lending by the banks that are the Top 22 TARP recipients — which just so happen to be the largest lenders to small businesses.  According to CNN, though TARP was intended to provide liquidity to small businesses as well as large, it’s just not happening.  The top TARP recipients have trimmed back lending to small business by over $8B.  Though the new administration required $15B be set aside for small business lending, that money has gone untouched.

So if a small business can’t get a loan, what about a charitable fund for small business?  Doesn’t exist, right?  Well, maybe not.  For 10,000 businesses, there is a chance for a cool $50k gift card…thanks to Goldman Sachs.  Goldman, with the encouragement Warren Buffet, has created a $500M fund to benefit 10,000 small businesses — providing access much needed liquidity.  Some media outlets are a bit cynical about Goldman’s motivations, but really what does it matter?  Goldman paid back its TARP funds and really didn’t have to create the small business fund. 

If your business can’t get a loan, and doesn’t luck out with the Goldman Sachs free money give-away, there is also the Powerball — with a 1:195M chance to win.  Or, you could do what KikScore is planning — a lemonade stand offering $100k organic lemonade.  It only takes one customer.

Let us know if your business has had any good or bad experience in obtaining a small business loan/credit line.

Tweet This Post

Posts Tagged ‘funding’

Diary of a Tech Start-Up: Funding…Dance with the Devil or Not

Monday, November 2nd, 2009

One of the ongoing debates going on with our tech start-up is whether to seek outside investment or not.  The first point that is often made by one of us is that it is too early to be thinking about it.  Heck, we just launched the beta version of this site and are now getting our first customers…isn’t it a bit presumptive to think about asking for $$ from a stranger? 

This scenario reminds me of a scene in the greatest movie of all time — Waiting for Guffman.  Corky St. Clair is charged with directing a play about Blaine, Missourri’s history.  Corky approaches the City Council and states that the ONLY thing he needs to throw the play is “one hundred thousand dollars”.  When informed that the City’s annual budget is $100k and that includes swimming, Corky responds “there won’t be swimming in my play.”  How does this tie into our discussion for asking for outside investment?  Well, maybe it doesn’t but it’s a great movie.  No, my point is that we before we seek out investment, we need to clearly establish a need for our services and that we have a competent management team that will know what to do with the money if/when we do get it.  We can’t go in all Corky St. Clair, not having a clue as to what is a reasonable amount of investment and establish what we are going to do with the money will have a strong likelihood of showing a return on investment.  See Corky asking for money

Now comes a more pressing question.  Assuming the time is right (and we don’t ask for the entire City Council’s budget), do we seek out investment at all?  As Raj pointed out in an earlier post, there are now a lot of tools that exist that make starting and running a business very inexpensive.  To date, we’ve been self-funding KikScore and we’re pretty good at stretching a dollar.  While it would be great to have a swank office and have the ability to throw an awesome holiday party with a DJ, it may not be worth the equity and control we’d have to give up (it really depends on how good the DJ is).  We’re not alone in our thinking.  According to a recent posting on www.rockyradar.com — 84% of Inc’s Fastest Growing 500 companies never received venture capital (though many did likely get angel financing). 

Several of us on the KikScore team have been part of venture-backed companies previously.  Some of us had good experiences, some of us did not.  So, as we continue to grow our customer base and improve upon our core product, the debate within KikScore will rage — do we continue to self-fund or do we seek professional investment.  We’ll keep you updated (and we’d love to hear your thoughts about it).

Tweet This Post