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MenuHow do I get $500k - $1m in capital for marketing expenses for 3-6 months?
My company does about $3 million in revenue a year. I would like to get a loan for marketing expenses ($500k-$1m for 3-6 months). From what I've seen, it seems most credit lines are only up to $100k, but I'm entering an area here that I'm unfamiliar with. and could really use some advice. I'll be wanting to talk with someone who understands this :) Thanks!
Answers
If your looking for financing and not wanting to give up equity you could try to get venture debt. Check out Hercules http://www.htgc.com/ and their competitors these companies can provide big loans.
Be ready to provide a lot of info on your company and your financial health.
Be aware these companies exist to make money so make sure you end up with payments you can handle.
You'll also have loan covenants which will outline certain financial performance metric you'll need to hit. If you miss covenants your loan terms will change for the worse and it can even end up with bank taking control of your company. Obviously a worst case scenario, but you need to be aware and make sure you are very comfortable with the covenants you agree to.
- mike
I would suggest that there are several factors that you must take into consideration to achieve this goal, such as
1) You need to provide a comprehensive loan request which consists of a full package, along with financials with explanations and a solid make-sense plan showing exactly how this capital injection will benefit your company - to assure any investor that they can reasonably expect they will be paid back.
2) Your anticipated time frame for the return of this desired loan is enough to send off red flags to anyone.
3) You absolutely do not have to offer up any equity, provided you can offer a realistic guarantee.
Its difficult to offer you any detailed advice, based on the limited information that you've provided thus far.
Please feel free to contact me, and we can spend a few minutes to determine your best course of action.
Thanks!
Don't give up equity or do venture debt... Seriously?!? You're an existing and I assume you're profitable? There's a lot of "what ifs" on this, but typically you can simply go to a bank and get a line of credit up to $500,000 with just a credit score. But why would you use short term (line of credit) for long term solutions (loan)? Lines of credits are best for working capital needs. If you're looking to increase sales from a marketing campaign, dig deep and find what you'll be spending money on -- and you might realize you can do it much cheaper. However, if you're looking for the quick hit marketing turn into sales -- perhaps venture debt is best. Either way, have a good plan in place and take it to a banker (not the personal banker at your local chase). SBA is a good alternative.
I'd be happy to help you figure it out - drop me an email.
Interesting answers all around. I'm surprised at Jeremy's a bit.. $500k LOC for just showing up with a good credit score? Not where I'm from..
Some questions though, how profitable are you? What kind of product/service are we talking here? Is the business scaling or positioned to scale?
My bailiwick is in go public transactions, ipos, and congruent equity financings, and typically this can be a good entry point in my network for a business such as yours if it can be reasonably demonstrated that the investment can fuel the continued growth of the company it ways it has already established.
The benefits are the potential of a liquidity event for existing shareholders as well as follow on rounds of financing for continued growth if you are partnered with a good group or two going forward.
Happy to discuss these kinds of ideas in more detail if you would like to connect with me.
Regards,
Chad
Whoa!! What in the bananas are you spending 1M on marketing in 3-6 months on?! Perhaps you need to revisit that question first and look for a cheaper way - that's insane burn for marketing given your revenue. If you can provide more details perhaps we can collaboratively suggest how not to need those dollars and execute in a more affordable fashion. Let us know
Have you considered other forms of marketing that are much more about intellectual capital than anything else? RMentrepreneur.fyi.to/GrowthHacking
There are several ways to raise money.
Valuation is about putting the company on the path to an attractive exit in which the founders do extraordinarily well, the Angel investors do very well, and later round investors all get their expected returns. Start-up Valuation is not about control, which happens in the terms of the shares purchased rather than in the volume, since experienced early-stage investors rarely want a simple majority ownership. The seesaw for the founders is often about how much money to raise versus the pre-money valuation to use. The right amount of money to raise is usually the amount required to achieve the next inflection point in perceived value of the company. If you do expect to raise more money, since raising money always takes time, you should be planning to start raising the next round 3-6 months before your current runway expires. Let us consider a company developing a software-based solution that will run in the cloud, be sold on a subscription basis, and requires content, as well as platform development. The company needs enough money to hire and contract some development expertise, to hire some marketing and sales resources, to fund travel and to address some administrative basics including insurance, payment systems and an employee equity participation programme. Initially the founders have decided they need to raise $2m on a $10m pre-money valuation which means they will sell 16.66% of the company.
You can read more here: https://startupgippsland.com.au/how-to-value-your-startup/
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath
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