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Hey guys, it's me again. As was to be expected, I've run into funding problems with Idea School.

The quality teachers I'm looking for are worth about $50-60K per year. Now, of course, they understand that we'll be scaling up to that number over the first year or two, but really, I want to retain these people. They believe in the project, but of course, can't work for free and are used to a level of salary.

That being said I've got a money problem. Raising capital seems to be a great idea, but I'm not so interested in giving up ownership (not opposed, just not that happy about it). My personal credit has hit a pretty low point due to my prior irresponsibility with credit cards. Recently, I've taken steps to reduce my debt load and free up working capital monthly (selling my car, etc.). I also have no collateral. I'm running on bare minimum.

Where do I get more start-up capital (based on my projections, $15K would be comfortable, and $5-10K would do it, but would definitely be red line for the first few months)? No collateral loans? bad credit loans?

Alternatively, I've been brainstorming some simple intellectual products that I could create via Idea School and sell as .pdf's for $3-5 each and advertise them as donations with a bonus gift. Do you have additional thoughts or resources for simple fund raising products/ideas?

Thanks OnStartup Community! :D :D

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Still looking for alternative revenue streams. – Ryan Chatterton Aug 22 '10 at 19:29

5 Answers

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$15K is too little for VC. You probably won't find an investor for such a small sum of money anyways, so I wouldn't waste my time with that. Here are some ideas:

  1. Sounds like getting a bank loan is out of the question due to your credit, but what about friends and family? Have you thought about approaching the people closest to you and asking for a loan? You may not be able to get $15K from one person, but you might be able to find 3-4 people willing and able to loan you money. And since these are people you know, you can probably get better loan terms than you would from a bank.
  2. Have you looked into government grants? The federal government has money set aside for education grants. I have no idea what the terms are for these grants, but I know they exist. The current administration considers education to be important (and they love spending money :-), so I wouldn't be surprised if the number of education grants have increased. It's worth investigating, if you haven't.
  3. Sponsor fundraising events. You can do something as simple as a raffle giveaway, or you can get creative and do something more complicated. Have your teachers published any books? Maybe they can give you a couple of free or discounted copies you can raffle. Or you can raffle an ipad, iphone, etc.
  4. It's not clear from your question whether you are employed or not. If you're not, get a job :-) If you have a part-time job, find a full-time job or get another part-time job. The down side is that you won't have as much time to dedicate to your venture.

To answer your question about Business Plan templates, take a look at these other questions:

Are there any recommend sites for example/outlines/template business plans?

Online resource to view successful startup biz plans?

What books for writing a Business Plan?

Elements of a Startup Business Plan

As a side note, you might get more responses if you word the title of your questions differently. I noticed that you title your questions "New School...". If you make the title more descriptive, you'll get more people actually reading your questions. For example, for this question I would title it something like, "Looking for startup funding advice" or "Looking for ways to fund my startup". Just a thought.

I hope this helps! Good luck!

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Great advice. I'm a big fan thanks! – Ryan Chatterton Aug 23 '10 at 0:21
up vote 1 down vote

Why are you trying to start a unique school with such traditional methods?

Like most startups, you're no where near hiring anyone full-time. Pay instructors contingent on class enrollment. Offer a larger percentage if they develop the curriculum. Are you looking at the best candidates to teach business/entrepreneurship if they demand a salaried position?

Are you trying to build a brick and mortar school, online or both? Maybe you can find a local place that will let you lease a conference room for an hour or two. Are there any coworking spaces in your area?

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I'm not sure what a coworking space is, so probably not. At least I dont know of any. We're in SLC, Utah. – Ryan Chatterton Sep 2 '10 at 3:59
Then let me recommend: betaloftslc.com – JeffO Sep 2 '10 at 17:06
up vote 1 down vote

Great idea? No money? Get a job, save your money, work on your business part-time, get customers, produce a sale(s). In other words, bootstrap your way to validation and viability.

If customers or suppliers won't support you in the beginning why would an investor?

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Good point! I have 2 jobs. :D – Ryan Chatterton Sep 2 '10 at 3:59
up vote 1 down vote

Are you aware of the lean start-up concept and minimum viable product. Basic prinicple is that you create a version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort. In your case this would be a simple short course which shouldn't cost thousands of dollars to create, once you have run a couple of these courses successfully you should find it much easier to get funding as you have a proven concept and cashflow coming in the door.

If it is costing $5 - $10K for a minimum short course then you need to go back to your projections and look to where you can cut costs.

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Thanks Nigel! I'll get to this tomorrow! :D – Ryan Chatterton Sep 2 '10 at 4:00
up vote 0 down vote

Well, like so many people - you are in the phase where a funny afancy idea meets reality.

You need money. Point.

Get money. Point.

Giving up a percentage of ownership is the only sensible way - only idiots (and there are not too many around on that level) will gladly give someone who already has bad credit (as you indicate) a loan for something that risky.

Actually only idiots will sign up with that school, too, as teachers - because even if you get things running now, you have zero reserves. You should at least have the whole expenses for the first year in your pocket.

Sorry to be blunt, but that is a perfect example of how to not go through with financing a project. Even if you pull that of - start wise - yo uare set up for a desaster.

Ideas arae cheap. Entrepeneurs with fancy ideas to pull things off without capital (that reuire capital). All worthless - execution is important, and - obviously - arealsitic view on finances is, too.

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Don't apologize for your bluntness. Being blunt is important. With this being said, do you have any links to great business plan templates/help. I have friends who've been through this phase before and have instructed me that the 35 page business plan is mostly for banks. Anyways, are there templates out there for start-ups that are devoid of the ridiculous jargon? Strategic Planning is such a broad term. – Ryan Chatterton Aug 22 '10 at 19:29
No, I have alwaaays started my ventures like that - but done so on the significant cash flow of being an IT consultant. For example in the last year my company went into structured products trading. We just started having the first cash flow there, but the "weight" on my finances were neglegible all the time. – NetTecture Aug 22 '10 at 22:03

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