Venture Financing Games

There are so many entrepreneurs who want to start businesses, but they won’t get off their lazy butts to start the business until someone gives him 2 or $3 million for the venture capital. As a retired entrepreneur, who has started several businesses from scratch, literally from a “bucket of water and a sponge” into a national franchise chain cleaning cars, airplanes, and fleets of vehicles, I am often blown away by the audacity of some of these younger so-called entrepreneurs.

It’s amazing, how they wish to thrust themselves into the world of high-finance. You’d think they were investment bankers by the way they talk, act, and scheme. I can recall similar conversations with folks from Lehman Brothers back in the day, attempting to get me to merge my company with some silly nonsense and unprofitable brand.

Not long ago, someone approached me to discuss a new business venture that they were considering, and they pretended to be my friend, and discuss the actual concept, but what they were really trying to do is feel me out as an Angel Investor, and they were looking for 1,000,000+ and they indicated that they were willing to put in a couple hundred thousand dollars of their own money into the venture, but not unless they had the big money funding they felt they wanted to start.

This new innovation and invention was only an idea on a piece of paper, with rough rudimentary sketches. The reality is a prototype could probably build a built in someone’s garage or about $20-$30,000. Therefore, if they use their $200,000 to do this, they would have $170,000 left over once they produce the prototype. But alas, they were too lazy to start the process until they received a huge chunk of money so they could live on easy street while doing it, literally paying everyone else to complete their idea and concept, while they drove around in a new bright red sports car.

You see, if someone spent $30,000 building the prototype and had $170,000 left over, they could spend $40,000 to a Patents and still have $130,000 to actually start their business, and then go get venture capital. And it would be a lot easier to get venture capital once she had a working prototype and patents and, she’d be able to keep a larger percentage or chunk of the company as she started.

The reality is either I am getting too old, or this next generation is getting far too lazy. Indeed, it was interesting because the individual that contacted me was actually a couple years older than I was, but she acted like a twenty-something who wanted a free ride. The moral of the story is if you are an Angel Investor, and you are approached by someone like this tell them to “take a hike,” you don’t need them, they need you so they can go buy new sports cars and live high on the hog until the money runs out with your dime. Forget that noise. Trust no one.

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