Small $$ V/C - Private Investing Question

[asphaltgambler]

A question to all the guru's here. In these tough economic times, especially where the word 'safe' and decent ROI's are concerned, does anyone here have experience with small ($20K or less) private investing/venture cap?

Looking at ways to somewhat reasonably earn a better ROI than say your avearge stock, real estate, CD's etc. Something where I would dictate/control the terms to an existing small business or person in exchange for good returns.

I know someone here was doing something like this on a very small scale recently. Thanks

[dan88911]

Like a drug deal....... just kidding

[red-beard]

Be careful, Dodd-Frank had some implications to "Angel Investors"/small scale investors.

[jyl]

Not sure why that generally seems like a safe investment, or how you would control the business owner's actions.

[Shaun @ Tru6]

I've been doing high interest, short term cash flow loans for my business for a while now, $10K to $30K. Deposit for Fall production is greater than Spring profit. Growing sucks.

[Bob Kontak]

Safe and venture capital are a dichotomy - tough or booming economic times.

Venture capital associates with high risk. "Safe" is not on the radar screen. If you are asking us, stay the f*ck away from those types of investments. Mark my words.

There's room for bears and there's room for bulls but pigs get slaughtered.

[motion]

I've spelled it out a few times on this board, but nobody seems to be taking me seriously. I'm getting over 11%.

[on2wheels52]

Originally Posted by motion

I've spelled it out a few times on this board, but nobody seems to be taking me seriously. I'm getting over 11%.

per month?
Jim

[Shaun @ Tru6]

Originally Posted by motion

I've spelled it out a few times on this board, but nobody seems to be taking me seriously. I'm getting over 11%.

I've paid a lot more than that, but it was worth it.

[Rot 911]

Originally Posted by motion

I've spelled it out a few times on this board, but nobody seems to be taking me seriously. I'm getting over 11%.

I did when you first mentioned it last September and I even told others about it on another post! Very happy with the rate of return. 14.7% last quarter and around 9% so far this year.

[jhynesrockmtn]

Tread carefully. Lost some real coin several years ago. A mutual friend got involved and pulled some buddies in to some deals. Several went very well yielding significant returns. The friend who recommended it to me put in a quarter mil. Mine was a fraction of that. That was the last deal done. The person running the VC siphoned the money off to a real estate deal in Colorado rather than the small business short term loan it was supposed to go to. We lost everything.

[Jandrews]

Motion and Kurt...I am convinced, and ready to play. Just curious, how much money are you guys playing with here? If you are not comfortable saying how much in absolute dollars, then maybe could you just share what percentage of your "investable savings" you are using?

The reason I ask is 10% return on $10,000 is good for a couple new Porsche parts per year, but 10% of $100,000 starts to look like real investment returns. I read a lot of reviews about micro-lending, and understand the risks. Just curious how much $$$ a couple of "our own Pelicans" feel comfortable putting out there for this.

Thanks in advance, and sorry to the OP for the "micro" hijack.

JA

[Rot 911]

Mine is more than your lower number, but I am sure I am investing much less than Motion. Which is why I followed Motion's suggestions. He has a lot of skin in the game. If you go back and look at his posts he mentions 2-3 lending clubs. I went with lendingclub.com. A very well set up site. User friendly and makes it easy to invest at different risk levels. Like any investment don't invest more than you are willing to lose.

[asphaltgambler]

Thanks all - keep it coming

[kaisen]

Small businesses still have a tough time finding money in today's new banking climate. "Small" loans to fund expansion, etc can be almost impossible. Some types of businesses have a harder time than others. I'd love to borrow $25-50K to fund my company's growth, but it's far to little to be attractive to the big buys, and not willing to live with the terms (not rates, terms) of the little guys. I'd pay a premium, like Shaun says, to minimize the BS and get on with making money.

[Christien]

Shaun, what kind of rates are you paying?

[Jim Bremner]

City National Bank has a 4% 4 year loan right now. Min is 100k and max @ 500k. I'll be sitting down with them on Tuesday. it ends at the end of the month.

I had a bad fall- winter this year and I'm short what I need for a new product line.

I normaly go into spring with a nice cushion.

[Shaun @ Tru6]

Originally Posted by kaisen

Small businesses still have a tough time finding money in today's new banking climate. "Small" loans to fund expansion, etc can be almost impossible. Some types of businesses have a harder time than others. I'd love to borrow $25-50K to fund my company's growth, but it's far to little to be attractive to the big buys, and not willing to live with the terms (not rates, terms) of the little guys. I'd pay a premium, like Shaun says, to minimize the BS and get on with making money.

That's a big part of it. I've created no-brainer loans and they've worked. We've gone from t-shirts and some pants to our current wholesale catalog for Fall:

http://www.littletravelerusa.com/FA12_Traveler_Catalog.pdf

The big issue for me is I don't own a home. If I did, I could get a 6 year, 6% working capital loan instantly, personally recommended by the Northeast Director for SCORE, through a local collaborative, the Southeast Economic Development Council (SE refers to Boston area, not down South). I've been working with him for 5 years and this year, after seeing our growth, he's pushing us hard. Just asked me to rework our business plan to what he wants highlighted/will be important to a bank. We'll see.

[Shaun @ Tru6]

Originally Posted by Christien

Shaun, what kind of rates are you paying?

12% to 17% depending on the nature of the loan. Expensive money, but I'm keeping up with competitors 9-20 years old; all competitors that started about when I did are out of business. My burn rate is as low as possible.

I started the company just before the financial meltdown, had an amazing 07, very tough years in 08 and 09, been growing (slowly) ever since.

Just had our FA12 show in NY. Third season now where repeat orders were broader and deeper than the season before. Doing something right, but still very underfunded.

[Eric Coffey]

Originally Posted by Shaun 84 Targa

Just had our FA12 show in NY. Third season now where repeat orders were broader and deeper than the season before. Doing something right, but still very underfunded.

Maybe it's time to see these guys: