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As originally asked by William Hulbig.

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Jorge Cardona
Zintro Expert at Zintro
Dear William, like Ive said, your question has a so bad construction!!! if you are lending or investing . . . by default: the ROI always will be quite different (because it has implicit the found source like the main factor!!!), in favor of lending!! that case . . . I suggest you to review the ROI concept to reformulate your question!!!

George Mills
Retired Chief Financial Officer
Bill,
I believe you’re right. In this economy quasi-equity financing is the current future. Best wishes.

William (Bill) Hulbig
50+ Years; Serial Entrepreneur, Founder, CEO and Former Super Angel Creating Quality Deal Flow
George, in this economy no one can accept risk and it’s here to stay. Making money in short terms is my long term goal to having money. I’m betting quasi-equity financing is the future. Low/no risk w/high ROI, what’s not to love.

George Mills
Retired Chief Financial Officer
Bill.
Seems like you have done your homework with regard to risk on the loan side. Sounds to me like you don’t want to leave any money on the table. Do you have short or long term goals? Which scenario fulfills your goals with the best return and least amount of acceptable risk?

William (Bill) Hulbig
50+ Years; Serial Entrepreneur, Founder, CEO and Former Super Angel Creating Quality Deal Flow
George, gotta read your comment carefully to be sure I understand it. “…no obvious incentive for investment over lending then lending.. YES. Most are ‘opportunistic short-term loans’ and return handsomely with easily measured low risks. There is no one model, all one-offs and win-win. Does that help?

George Mills
Retired Chief Financial Officer
You seem to have the right information to make an intelligent offer. In this late but based on your question; when there is no obvious incentive for investment over lending then lending presents the best case for risk management. You are right in that if you want a greater ROI you must try and get that assuming that you clearly know the risk and the investment has more upside and down. Seems to me that is what you are really asking.

William (Bill) Hulbig
50+ Years; Serial Entrepreneur, Founder, CEO and Former Super Angel Creating Quality Deal Flow
Thanks to everyone for your comments, they’ve been very helpful to me in staging my new ‘adventure’. I invite you all to connect, and remember, ‘Skills Beat Luck Everytime’

William (Bill) Hulbig
50+ Years; Serial Entrepreneur, Founder, CEO and Former Super Angel Creating Quality Deal Flow
Prashanth, take the money and run! You obviously like start starting companies, now you can finance you next adventure. Best of Luck.

William (Bill) Hulbig
50+ Years; Serial Entrepreneur, Founder, CEO and Former Super Angel Creating Quality Deal Flow
Viking, major universities often fund ventures like yours for stock or some form of upside. Have you asked them? They also like the ‘invented here’ publicity, so you try playing that card too.If that doesn’t work, I suggest going to logical OEMs as I suggested in an earlier comment since it’s patented and in the pipeline.

Prashanth Bagali, PhD
SENIOR MANAGEMENT EXECUTIVE (COO / SVP / VP / AVP / Lab. Director)
Hello Bob,
I co-founded two companies, namely, life sciences and bioinformatics oriented company in Bangalore, India, which was a subsidiary of Malaysian company and a molecular diagnostics and biotechnology oriented company in Kuala Lumpur, Malaysia. Ffor both the companies, We (Shareholders/Directors) funded for first 2 years of operations using our savings. After 2 years of successful operation, we were lucky to get federal grants in Malaysia, supporting purchase of biotech equipments (capital expenses) and international business expansion. I exit from previous company and concentrating on diagnostics company. After 5 years, it is very hard to expand business without external investments. So, we are looking for significant investment into the company. But, companies are interested in “total buy or purchase of company” rather than investment for a stake. Federal Government is ready for “loan” rather than any stake in the business expansion. It’r really challenge and tough to take decision brining consensus of all Shareholders/Directors.

Viking Business Development Consultants
Lade drück seit 1973
My client has developed, in conjunction with a major university, a game changing micro-surgical device. Patented, FDA clearance granted. Product in controlled, limited distribution, training now ongoing at 6 major hospitals/cardiac centers. My client needs funding to market and mass produce.

William (Bill) Hulbig
50+ Years; Serial Entrepreneur, Founder, CEO and Former Super Angel Creating Quality Deal Flow
Jorge, I was super-angel once, but today I’d be an opportunistic lender and pay the damn taxes! No longer investing or lending except to my own business.

William (Bill) Hulbig
50+ Years; Serial Entrepreneur, Founder, CEO and Former Super Angel Creating Quality Deal Flow
Viking, you make two points…

1. OEM partnering example: Start-up has no sales, but has patents and is is far down FDA path to FDA approval on surgical product. Goes to 5 largest OEMs that sell similar product, OEM pays for everything (they get to expense), start-up owners/employees get salary, OEM gets exclusive distribution, in ‘X’ years no matter what OEM buys start-up for a set price (could be worth nothing or $billion, but they buy you out at set price). Best deal out of 5 wins! Simplified version!

2. Incubator VC’s are personal friends and can’t divulge their identity w/o their permission, but they’re based on the East Coast and have great track record. Not sure how they select companies they take.

Jorge Cardona
Zintro Expert at zintro
Always lending make the ROI better!! is not a matter of risk . . . it is a matter of rentability of the own resources!!!

Viking Business Development Consultants
Lade drück seit 1973
” Getting back to medical devices; start-up partnering with OEMs is viable. We even have a VC-backed medical device incubator locally that invests and even builds the devices!”

Tell me more?

William (Bill) Hulbig
50+ Years; Serial Entrepreneur, Founder, CEO and Former Super Angel Creating Quality Deal Flow
BOB,’…can not be good long-term financing options…’ YOU’RE ABSOLUTELY CORRECT.

All ones I’ve been referring to are ‘opportunistic’ one-time deals, and there are plenty out there during these troubled times. If you were in the furniture or garment industry you’re probably familiar with factoring which can be used similarly, but you sell or finance your receivables at 2%/month or so I’m told. Crazy to pay 24% on an asset? Not if you make 5x that!

I keep looking forward to your next comment! Too bad we can’t more people involved.

Getting back to medical devices; start-up partnering with OEMs is viable. We even have a VC-backed medical device incubator locally that invests and even builds the devices!

Start-Ups gotta start thinking outta the box.

Bob Light
Director, Financial Systems at VBrick Systems, Inc.
Hum, has the phrase “financing with benefits” been used to describe this before. Bring your checkbook but not your toothbrush…:>)

More devil advocating:

Ok, I see the logic/value in what you are saying, but still argue that realistically, 30-70% returns can not be good long-term financing options for most entrepreneurs either. Also, if done properly for the right reasons, the “marriage” route doesn’t just bring capital into a company, but experience and networks as well (pre-public offerings, as in the big picture, very few companies ever end up going the public route, the worst fail and the best get bought before they do)

I still stick to the short-termed nature of these types of transactions. Early in my career I worked in retail office furniture, and would bid on large deals that basically were paper transactions. That is, we never touched the merchandise, only ordered it and had it shipped directly to the customer. The margin was somewhere around 5%. Since my company did not have the cash to cover the cost upfront, we went to our bank and for 1.5% (loan origination fee plus 30 days interest), we were able to do the deal, ending up with a net of 3.5% (this customer paid timely and predictably on terms). The bank made 18% annualized (good deal for them) and we made 42%, just for a small amount of admin work.

While this worked out in this case, start-ups created by unemployed professionals (majority being consultative companies) trying to build a long term business won’t have the margins to pay high interest rates over long periods, nor if it just accrues, will they be excited to pay it when it comes due…

Art Quillo
President/CEO at Trinity Health Care, LLC
As an entrepreneur who started a small regional outpatient imaging center company with his own money and found high net worth “angel” investors when I needed expansion funds, I can tell you that when our reimbursement world turned nasty after DRA and later reductions, I would have been much happier and my company much better off, if I had used a loan from those individuals instead of “investment”.

After funding over 10 imaging centers using a transactionally based loan model and living with investors as well, I’ll take the loan any time.

William (Bill) Hulbig
50+ Years; Serial Entrepreneur, Founder, CEO and Former Super Angel Creating Quality Deal Flow
Bob,re; ‘Why is the “share” model losing favor?’

I’m finding investors only want to ‘date’ entrepreneurs no ‘marry’ them, and lending has less legal entanglement, no SEC regs, less risk and provides an exit date.

I’m really seeing a substantial uptick in adversity to dilution from entrepreneurs. Many unemployed professionals are viewing a start-up as their only alternative to getting job, and dilution is a huge turn-off. They’re out to build a long-term viable business for themselves with out betting on an near-term exit strategy. They supply their own seed money and generating revenue before seeking small of growth capital ‘loans’.

Bob Light
Director, Financial Systems at VBrick Systems, Inc.
@Prashanth – what are your experiences as an entrepreneur, and challenges around financing your operations?