Would you take on an investor for new site?

by tommycash 9 replies
If you were starting a new ecommerce site and you only had the capital to basically bootstrap the entire operation, would you take on an investor if given the chance? If so what would you do with the money?
#ecommerce sites, wholesaling & drop shipping #investor #site
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  • Profile picture of the author alksense
    I always try to fund projects that I start by myself with my own money.

    The only time that I've used an investor was for an offline project I was involved with a few years back (digital signage for Dunkin Donuts locations). This was only because I had three business partners and to be honest, I had more cash than them and I didn't want to take on the majority of the investment on my own.

    If you're going into business alone and you have some cash I think it's best to just reinvest your profits into your business and grow it on your own.
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  • Profile picture of the author Silas Hart
    Yes, and I've funded several eCommerce projects.

    If you are seeking an investor, I strongly recommend only finding an investor that doesnt want to stand over your shoulder or has personal experience in eCommerce.
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  • I wouldn't take on an investor.

    For a couple of reasons -

    1, I don't like sharing profits. When I make money, I like keeping it - it is much better to just have everything for myself. Profits, control, decisions, business, etc.

    2, I don't like DEBT. Even if the investor understands that they are taking an inherent risk in the investment, I don't like thinking like I'm indebted to anyone. My company (companies) have no debt, have never been in debt, nor will they ever be in debt - because times of trouble WILL happen - and you have to weather them. With debt, you'll be screwed royally and for a long, long time. With an investor, that could hurt as well.

    There are 2 ships I never embark on. Sinking ships, and PartnerSHIPS.

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    • Profile picture of the author tommycash
      I have an interested investor. Nothing more than funding. I have the capital to bootstrap the operation and pay for the necessities. But I will have zero marketing capital.

      The only thing I could think of is use the money for PPC, etc.. to launch the operation on a much quicker level. Otherwise I will be relying on organic traffic in the beginning.
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  • Do you already have your PPC tested and working?

    Or is this investor forking their money over to 'learn how much it will cost to acquire customers?'

    PPC isn't perfect on day one, because it takes testing, building of negative keyword lists, split testing, etc.

    It takes a while for it to work - so does the investor know that they are paying for 'testing'?
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    • Profile picture of the author tommycash
      No I don't.

      I am not going to accept the funding at the moment. Just curious to see if anyone here has taken investors on for an ecommerce project and what they used the funding for.

      If the investor was experienced with ecommerce and understood PPC, then I would consider it. However, I can already see the massive amount of headaches I would have to deal with using funding for PPC when I have not already tested it and found my strategy.
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  • Profile picture of the author Silas Hart
    Getting capital from a loan or funding For Marketing is probably the hardest business related process, ever. Most people want you to have demand, and pre-existing marketing for product(s), and where you usually have spent most of your money in marketing you will have spent less on your actual inventory, and when money is used for inventory where-as there is already demand then a bank and investors see this as much less of a risk. Any time I've lost money from an investment, it's because there wasn't marketing already done.

    Someone with experience in eCommerce AND PPC and other forms of eCommerce marketing, will probably be more of a threat than a convenience, as they will have the two major components in running your business by themselves. In eCommerce, building as much as you can with your own capital with a major focus on marketing yourself or with the assistance of someone you have hired to manage a marketing campaign before taking on an investor is what I recommend.

    From my experience, I have only partnered with others for the lack of capital on large scale funding requirements for inventory which is a physical and easy to negotiate upon an exit, intellectual property needs, and mostly - Direct Fulfillment (logistics) which is also kind of physical but keeps me from having to hire people and deal with laws, regulations, warehousing agreements, property, and things such as human resourcing which I see as where time is needed which is not something I have.
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  • Profile picture of the author cpoalmighty
    Investor funding can be a good thing once you know what you are doing. You must have that strategy in place on how you would obtain your clients (through direct marketing, snail mail, internet marketing) you must have the proper systems in place to meet basic supply and demand when you start gaining your clients from your marketing plan. A lot of people falter on that step which causes them massive negative reviews and bad publicity. You also need to have a clear direction on where you would like the company to be in the next x years and how much money it will take to get there.

    Basic example of investor funding turning good is when Steve Jobs decided he would need funding to turn the motherboard Woz had designed into a fully assembled computer for the store owner. They received massive profits from that one deal because they had a clear direction (although it was not known before the store owner mentioned it) of where they were heading at that time.

    Another basic example of investor funding turning bad is when Steve Jobs started NeXt and managed to obtain an investor who liked his product. I think it was funded from that person for up to 5 years before going soar. (cant recall to clearly because haven't read it in a while)

    Investor funding is not something for the faint hearted and week minded. You must have that clear direction on the path/s you would take and always have a backup plan in case things do no turn out the way you have hoped. If you just have a rough idea on the details, then I would recommend you either solidify those ideas into concrete plans or simply pass on the offer for now
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