Forums: Discussions for entrepreneurs and small business.

Ive done research and unsure which route would be better, VC or Angel.

About startup:
Sector: IT / Software Services
Growth: High
Expected Annual Gross Potential: $60 million +
New Idea: No, however new way in which it will be presented and who it will be marketed to. It will be marketed to consumers whereas most in this industry target businesses.
Average Expected sale per customer: $30/yr
Recurring revenue model: Yes
Cost to acquire customer: $30 "first year will be a wash"

The following has been completed:
Business Plan
Marketing Plan
Marketing Materials
Designs
Mascot Creation

The initial capital needed will be used to build out the systems which will cost around $500k between a couple employees and the licensing / fees for the systems to be built.

Once systems have been built $10 million be needed to hire on staff, business expenses and advertising.


So is it better to search for an Angel, VC or both?

azbusiness,

Your business stage and the initial round mean that you are not yet a candidate for VC type funding.

In your second round the amount you seek and the revenue potential would make it "unattractive" to the VC world.

I'd look for some "smart" money to facilitate some initial engagements and develop a highly scalable business model.

I would say an Angel for what you need right now. Is there a way you can make sales without the investment? You may need to show early stage sales and key reference clients for an Angel to invest.

My company is Compound Profit. Compound profit provides working capital to small and medium sized businesses, including start ups.

We offer Unsecured Business Financing, Merchant Card Advance and Processing, Equipment Leasing, SBA Loans and Business Credit Builder , among others.

Our company could certainly help at least get part of the capital you are seeking.

Are you working soley on personal credit or have you established business credit ?

Keith