What would be a really attractive return on investment?

**simplejack** · 01-05-2009 11:28 PM

I'm curious what would be a really attractive yet reasonable return on investment if I wanted to get all investment from a single person and do everything without stock.

Obviously a lot would depend on the perceived risk. For the purpose of estimates, assume the investor had good confidence in the business but still felt it to be medium low risk.

The investment could be anywhere in the range of 25k - 250k.

What % return over two years would look really good? I'm more interested in agreeing to give back over a fixed period of time (2 yrs for instance) rather than selling a portion of the company.

I guess what I really want is a big loan, I just don't have the ability to get one from a bank.

**simplejack** · 01-05-2009 11:39 PM

Also I'm wondering how something like this would work for an investor from a tax standpoint. Since there would be no known stock value, I'm not sure how it would work as a profit / loss. Because the amount paid back would likely be influenced by the profits made by the business, it doesn't seem right to call it a loan.

Sorry if this is a dumb question. I have a lot of reading to do still.

**Gaulkin** · 01-06-2009 12:04 AM

Right now i would go with a savings account with a 4% APY.

**simplejack** · 01-06-2009 12:15 AM

Shortly after I posted this message I saw a google ad to turn $10k into over $1mil in less than a month. I can't offer anything near that, but still, I'm not sure what's an attractive return.

What about something like:

$100k into $200k over two years with returns starting likely within 6 months, but almost certainly within 12?

**akula** · 01-06-2009 12:22 AM

Originally Posted by simplejack

Shortly after I posted this message I saw a google ad to turn $10k into over $1mil in less than a month.

dude, i come to this forum because I expect to be able to share in discussion with interesting, compelling, intelligent, forthright individuals
let's do each other a favour and steer clear of mentioning rubbish like the stuff which I have quoted

**simplejack** · 01-06-2009 12:36 AM

ya it sure sounds like a joke. i didn't take it seriously, i was just trying to point out i don't know what's realistically attractive. sorry i didn't make that more clear.

being realistic, i question what i said offering 100k into 200k over two years wondering how attractive that is. if the person has confidence, it seems like it would be really attractive, but i know a lot of people are looking for startup capital. even given that fact, maybe that is still more than i should offer.

**rogercbryan** · 01-06-2009 11:39 AM

There is more to finding an investor then what rate of return you are offering. You need to be able to substantiate the ROI to the investor. You need to have either a profitable business that you are trying to grow or you need to have an amazing idea that can easily be turned into reality.

I would rather invest $100,000 with a 8% return in a company with solid sales and growth potential then $10,000 with a 500% return in someones idea. It's not just about the offer its about the business and where the money is going.

With that being said you are basically asking the wrong question. You need to show what your business is and what you are going to use the money for before anyone can tell you what to offer potential investors.

Lastly, not to bust your bubble but if a bank wont loan you the money and you have nothing to put up as collateral then you are not going to have much luck finding an investor in todays economy. Start your business small... grow it... and then maybe people will invest.

**simplejack** · 01-06-2009 02:37 PM

i understand your view. still it would be foolish to pass up an investment oportunity in someone who could talk enough about ideas to convince you strongly there was little to lose and tons to gain.

everybody keeps telling me the same things. my dad just gave me his view on things saying i should just work and save money. that's my plan, but if i happen to find the right person, getting someone to invest in me has many benefits.

i'm not too attached to what happens.

**rogercbryan** · 01-06-2009 03:06 PM

Originally Posted by simplejack

i understand your view. still it would be foolish to pass up an investment oportunity in someone who could talk enough about ideas to convince you strongly there was little to lose and tons to gain.

everybody keeps telling me the same things. my dad just gave me his view on things saying i should just work and save money. that's my plan, but if i happen to find the right person, getting someone to invest in me has many benefits.

i'm not too attached to what happens.

I always pass on people who try to talk me into something... show me the numbers... show me your plan... or go away... thats the only way it works..

**StealYourDreams** · 01-06-2009 03:07 PM

Originally Posted by simplejack

i'm not too attached to what happens.

Change that ASAP. Unless you're 100 percent behind what you're doing and believe that failure is NOT an option, you wont be very convincing to potential investors.

I also disagree with what RogerBrian says in regards to not being able to find investors if you can't go to a bank. Thousands of projects get funded because they don't meet the bank requirements. Let's face it, investors are a pain in the ass.

I've funded some pretty stupid projects. Most werent worth the paper they were written on, but investors are greedy and you need to feed that greed.

I'm going to assume that you're pre-revenue, no assets, and an idea that you believe in. Now the people I normally deal with are not interested in doubling their money they're looking to turn a $1.00 into $10.00 by getting in early on the next big thing. They want to see a reasonable exit (36 month) at a significant multiple. If you can justify the multiple with reasonable assumptions, showing them how you'll pull it all off, then you'll at least get their attention.

Also, dont kid yourself with this low risk nonsense. Any startup is high risk especially if you dont have a track record. There's nothing wrong with risk, you want the risk takers.

**simplejack** · 01-06-2009 06:50 PM

My comment about not being too attached was only related to getting an investor. It would speed things up, but is likely too difficult the way I want to do it. I have work right now where I can make $50/hr and save, so I may just do that for a little while.

Agreed about the bank comment. My credit score is bad because of past health problems.

That definately makes sense about them wanting to get in early and make a multiple of the investment. I guess I'm a bit greedy in wanting to limit that. I'm open minded on arangements, but don't want to have to deal with any stock type stuff.

The low risk is how I perceive things, especially since the investment would be in me and not a single project. Finding someone intelligent and open minded enough to try and see if they can understand and also have that view may be too difficult.

I know I think about things differently than normal. I'm not naive expecting this to work getting money from someone. I figure it's just worth a shot.

**Shahab814@yahoo.com** · 01-07-2009 01:22 AM

are you thinking about business investment or stocks at other type of investment?

**CDRamming** · 01-07-2009 11:27 AM

I have spoken to a venture capitalist in Chicago in hopes to fund one of my business ideas. The partners in his company have these set returns. 10X return on investment in 5 years, $500,000-$1million initial investment, professional management and/or board of directors, atleast one seat of the BOD is one of the partners of the VC fund, the VC fund owns atleast 20% of the company. In 5 years the company relinquishes their ownership stake and the company is to be sold so they can reap the 10X return with profits from the sale. It's a harsh process but necessary when you want to barrow a large amount of money.

**schoeps** · 01-07-2009 02:48 PM

With this economy, I would put it in something safe and FDIC insured like a CD. Vanguard and ING Direct offer some nice revolving CD's that are pretty high yield for what they are. Just my opinion!

**simplejack** · 01-07-2009 03:02 PM

I was asking in regard to a startup business type investment.

Yikes, that's pretty crazy what that VC wants. I guess it depends on the risk though.

I'm thinking to find the type of person I'm looking for will be too difficult. I'll put a little effort into it, but don't expect it to work out. If I take things more gradually I should be able to fund things myself rather quickly.