

ASK Hn: Funding a "small" startup in London - malux85

Hi everyone<p>I have just arrived in London and have created a web startup - I have a couple of products that I think can generate income, but am focusing on the strongest one first ... I am looking for funding to quit the 9-5 job and concentrate on the main product. 
The funding I am looking for is about 20,000 pounds ... can anyone point me in the right direction? I am unsure if I should look for an investor to gain contacts etc, or if I should approach the banks for a loan? Any comments and advice appreciated!
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JacobAldridge
Firstly, this is not financial advice, I'm not a vc (I am a business coach,
fwiw) etc. See these as generalisations, not guaranteed cases for any
individual situation (such as your startup).

As a general guide, Banks won't lend money against a start-up business. The
business is not a secured asset at this point. For £20K, you may be able to
get a loan against other assets you have (such as a house, though if you've
just arrived you probably forgot to pack one of those) or even an unsecured
personal loan (more difficult, particularly up to £20K, and I've just
experienced my own no-credit-history fun having moved to London so I know
there aren't many organisations or banks with lazy cash to splash around).

Start-up seed funding is often called the 'Friends, Family, and Fools' round.
Since £20K is a small amount (compared, of course, to bigger amounts), it may
be possible to borrow it from friends and family who know and trust you, or
'fools' who don't know you but decide to trust you anyway. This is, generally,
your best bet for amounts of this size. You mention looking to gain contacts -
is it possible to leverage the contacts you already have?

Finally, in regards to taking investment from someone who is an investor. They
will probably want to see a business plan - more specifically, what are you
going to do with £20K? I'd say your lifestyle will be different to mine (I
have, for instance, an international mortgage and a beautiful wife to part-
fund) - it costs us just under £5K/month to live reasonably well in London,
and a single in a shared flat could probably get by for £2K - do you want £20K
so you can live for ten months, or is some of that specifically earmarked for
marketing, training, software programmes etc? It may be easier to find an
investor for slightly more money, if you have some specific investments
planned, than for a smaller amount designed solely to rescue you from 9-5.

Once again, these are all generalisations. You already have the web startup
created and a couple of products - that may be all you need, with the right
introduction, to progress. Oh - I'm always happy to make time for coffee to
discuss - see my profile for contact details.

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quii
Just to note, I live in central London (as in Zone 1), on around £1500 a month
quite comfortably. £2k a month is excessive

~~~
dalore
That's cause your in zone 1 as you've said. You don't have to pay for an
expensive travelcard :)

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eftpotrm
Do you _really_ need to live in London? If we're talking the classic example
here of ramen profitability, you can do that for about half as much cash by
moving out along the train lines and commuting in when you need to. I'm about
an hour from the city by a relatively reliable rail service, and weekly season
tickets really aren't that expensive.

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MicahWedemeyer
Any reason not to keep going as you are? Or, perhaps you could request to
reduce your work time to 50%? This can be tough to do, but many places would
rather negotiate than see you just walk out.

Funding yourself (with job, contracts, etc.) is rarely discussed here, but
it's a much more reliable way to get money than seeking investment. It's tough
to find the time balance, but there's something to be said for having a
basically endless runway.

~~~
pbhjpbhj
>but there's something to be said for having a basically endless runway.

That you never have any motivation to take off?

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MicahWedemeyer
Sure, feel free to jump ship and go for it. Just make sure you've got more
than 3 months saved up. Real businesses take time to build.

~~~
pbhjpbhj
>Real businesses take time to build.

Word. But, time/money constraints can be a great motivator.

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ig1
Your best bet might be to apply to seed accelerators for that amount of money.
£20,000 seems an odd amount of money to want to raise, accountancy and legal
fees will probably eat up a decent chunk of that, if you're going after angels
it might be easier to raise a large amount. What's your plan for spending that
money?

How far developed are you products and what markets are you working in? - if
you're in the b2b space another option might be to approach potential
customers and see if they're willing to finance you (or even if they can
provide an letter of intent saying they intend to buy your product; you may be
able to use that to get a bank loan).

Another option could be to become a contractor for a while, 20k isn't a huge
amount of money, you could easily earn that much money in 3-6 months (if you
take payment through your company and re-invest it in your startup products it
also means you won't have to pay any tax on it).

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fredoliveira
You could probably try getting started by reaching out to some EU-focused
angel investors - there's quite a few in london.

I keep a list on Twitter with a few who are active:
<http://twitter.com/#!/list/f/eu-angels> There's also AngelList for Europe
here: <http://angel.co/europe>

There are also other options. Since you're aiming for 20k, which is not a high
amount, you may want to try the 3 f's first - Friends, Family, Fools. A
personal loan might work too. It boils down to how much risk you're willing to
take. (I'd go with angels first, because investing is what _they do_ and they
can help you more than just providing you with cash.)

~~~
gstar
And definitely apply to Seedcamp, €50k funding is available, and it's by all
accounts an excellent programme.

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hugoH
why not get a 3-6 month contract, live normally, then use the surplus as
runway funding? contracting rates in london are normally pretty good.

that way, you don't risk financial ruin, and you can bootstrap yourself.

(i did this succesfully over a period of 2-3 years, while not London I am UK.
pm me if you like!)

~~~
chargrilled
HN doesn't have private message functionality and you don't seem to have any
contact details in your profile.

Is there any other way of contacting you? =)

~~~
malux85
Hi all

I use this address for gtalk IM only (don't mail it) .. so I dont mind if I
get spam from sharing it here! Feel free to add me anybody, but remember I
work a 9-5 and cant chat heaps during the day

alain.richardt85@gmail.com

Cheers Alain

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Robin_Message
You could apply to <http://springboard.com/>. It's a startup accelerator in
Cambridge, which is a little cheaper than London and only an hour away by
train if you ever do need to be there. Application deadline is _this_ Sunday I
believe, so ideal timing ;-)

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will_critchlow
I'd love to chat. I may not be your 'fool' (see other comments) but I may know
some. I'm based in central London. I have some contacts.

One day I'd like to be making investments like this (he says, not really
knowing what you're planning to do).

Can you share more info privately?

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malux85
Yes absolutely, I'm just at work at the moment, but will send you my contact
details (email + instant messenger etc) tonight, cheers :)

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Julianhearn
Why don't you make some thing you can make money from, then invest your own
money in the start up idea?

Either that or do I did and keep a full time job and work evenings and
weekends until your startup matches your salary.

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weesilmania
I am a potential fool but would like to find out (a lot) more. I work
centrally and live slightly north. Drop me a message and we'll chat.

~~~
malux85
Hi there

Cool let's chat :) email me on alain.richardt85@gmail.com and I'll send you
much more info

Alain

