If they’re as unprepared as they seem, it’s actually a pretty good offer I think.
I’m willing to stand corrected if OP has more than just a business plan of some sort. But no actual investor I’ve ever talked to would even consider this with so little information available. Dozens of “I can get you the money” brokers who will make big promises and never deliver, but that’s about it.
Hey I need an investment too. We don’t have anything yet but a little capital, a plan & one of the most talented genomicists in the world as our science chief.
This is a different way to do an ask that some investors could bite on, depending on the maturity of the industry. Ie, op never referenced the qualifications of themselves, which is always a shark topic cause it both humanises the deal for TV, but also cause it damn matters.
So that 300k at 75% sounds a out good now.
I heard most investors won’t even hear you out unless you have a valuation by one or two independent companies. And history to show. It’s like a 1:1,000,000,000 shot without that starting a company out of the blue with ideas and a business plan to get started. Just saying.
Valuation is such a bs concept for new companies. Founder should know what they’re selling, investor should know what they’re buying. Deal structure should reflect that understanding.
An independent valuation helps but they’re all horse shit anyways and everyone knows that, especially pre revenue or contracts.
We haven’t bothered but we’ve got the financial models and contracts to prove the value. Probably would be easier to justify our valuation if we paid some asshole a few grand to understand our financial models and go “yeah that looks right,” but I’m a frugal bastard.
All you’ve got to do is have a shit ton of luck and struggle with 18 hour days for months or years and risk bankruptcy (or start as independently wealthy) and your business will be a success. It’s that easy.
Anyone who doesn’t list luck as one of the top three reasons they’re successful doesn’t know why they are successful. Work as hard as you want, you need a healthy dose of luck to get there too. Of course, luck generally looks a lot like hard work when it shows up in front of you.
Luck some people have it some people don t hard work compensates part of it 
I need an investor too lol
At least you have something concrete to offer @Apothecary36 . I know of 2 projects you have posted on here. The FFE id say is interesting if the cost is lower than the competition and your pressurized vac oven.
You have prototypes. Im sure a business plan. Working on patents. Now i can understand why you would need capital and can see the collateral in your example. The OP profile is private. Just got here and is asking for money without laying some cards on the table.
There is a huge difference in a company with assets you can collateralize and an Idea like the OP kinda alluded to.
Thank Goodness, I was gonna shit my self laughing if you took that deal
I respect that so much.
I’m being cheeky of course, but there isn’t fundamentally a lot more to it than that under the hood. Yes, they look at comparables, market, a bunch of other stuff. But valuing a company that is pre-revenue, especially one in a brand new market, is hand wavey bullshit at best.
Any investor worth their salt knows a valuation is just one more thing to argue about/negotiate over. Whether you paid for an external or not, they’re going to tell you that it’s too high because of X, Y, and Z, and you need to be able to back up why it’s not.
When I’m selling a car, it’s not worth what some blue or black book (or some consultant) tells me it’s worth, it’s worth what I can convince the other party to pay for it at that time.
I know what I’m selling, they need to understand what they’re buying, not just what some third party says about it.
If you’ve got an operating company in an established company with proven revenues however, this changes. But we’re talking startups in the cannabis space, not an operating McDonald’s franchise.
We could all use an investor, and anyone can get a business plan made up.
Do you have experience? Do you have proprietary knowledge or techniques?
Do you have even underground recognition.
Do you have a verifiable source of quality product to process? If ya don’t have stuff to extract then your business model is not accurate.
However, sweat equity and real knowledge and experience play a part, and proof of skill do as well.
(X amount of the loan will be secured with the equipment which is a tangible asset)
Do you have any SOPs in place. Having them is important but allowing investors access without signing an NDA/non compete/non circumvent would be suicide(trust me I already did)
Therein lies a problem. You called it a loan. A loan is not an investment, it’s a loan. Right way to structure an investment is preferred shares and common shares.
Every single investor I’ve ever talked to has either:
And you literally did this above.
Implied valuation of $400k, (which I still feel is likely overly generous based on the information provided, and they should take it before you reconsider). They think it’s worth $1m (300k for 30%). Now you’re arguing about the valuation of the company.
Would you really just pack up and go “oh ok I was wrong, here take my money for 30%” if they said “well mr professional consultant business evaluator just told us it should be $1m”? I really doubt it. I’ve never met a professional investor who is actually writing big checks that puts much (any) stock in valuations for pre-revenue companies.
You need a valuation to raise money. You do not need an external party to generate one if you’re capable of doing it yourself. And I’d argue that you probably shouldn’t be trying to start a business that needs to raise external capital unless you’re able to manage that yourself or have someone you can trust that knows their shit help you on the money side of things.
If you understand the financial opportunity, and know enough to see a market need and try to fill it, if you can’t quantify it yourself, you’re gonna get taken to the cleaners by someone - be it investor, business partner, or someone else.
Yeah, once you’ve got those, all of this changes - we’re saying the same thing, really. I’m talking about pre-revenue companies, which are inherently iffy to value, because you don’t have any real fundamentals to base that valuation on, just where each party thinks things could go. Especially in brand new markets. You can make general assumptions, extrapolate from other markets, all that jazz - but you’re still guessing.
A note for anyone who hasn’t dealt with these: get a professional to draft them and advise you on them. A shotgun clause generally heavily favors the party with the most money, which is usually your investor. Not saying they are a bad thing, but you need to be aware of the potential pitfalls.
I will give just about anyone just about any interest rate they could ask for if they’d structure it as a loan. I only ever had one taker, and it wasn’t for a very big amount as it was in our family and friends round. They were very happy with the result, and so were we.
Every penny I can take on as debt is another penny of value in the company that I’m not giving away - and I think that penny will be worth a dollar or ten or a hundred at some point, so I’ll do everything I can to not give it away if I don’t have to.
I agree
Loan me the money and step back, and let me pay a predetermined amount, and I keep everything.
Unfortunately most people with money don’t want that , because it is secured by nothing
Contracts, Contracts, Contracts. Can you prove you can move it? Thats it. Period.