3 ms·

So umm.. who wins if these limits are successfully put in place?

by vishaldpatel 17y ago

david927 17y ago
Something like this: http://www.me-vc.com http://www.me-vc.com
- SamAtt 17y ago
  I'm sure that company will too but on a larger scale I think Banks win. Angel Investors compete with small business loans and generally win since small business loans require you start paying them back right away where as angel investors just take a piece of the company. So if Angel investments become prohibitive it will force wannabe entrepreneurs into the waiting arms of the banks.
  - jacquesm 17y ago
    Angel investors do not typically compete with small business loans because these companies would not in a million years get money from a bank. Angels invest exactly in those that can not get money from banks because they are too high risk. Once a business is established and has a balance sheet with some assets on it you can start thinking about applying for a regular loan. For small businesses at the 'start-up' level it would be great if they had access to bank loans for their needs, since borrowing from a bank is much cheaper long run than from an angel (after all, the bank does not take equity, only interest). Has anybody here ever gotten money from a bank based on a non-existent business?
    - SamAtt 17y ago
      I'm sorry but you're just wrong here. This is the first link that comes up on Google when you search for "Small Business Loan": http://www.merchantloans.com/ http://www.merchantloans.com/. The first item listed under that heading is "Start/buy a business or franchise" This About.com article (http://sbinfocanada.about.com/cs/financing/a/getbusinessloan.htm http://sbinfocanada.about.com/cs/financing/a/getbusinessloan...) starts by saying... "Sooner or later most small businesses need to get a small business loan, whether to get the operating capital for business startup or to finance an expansion. " Small Business Loans are the #1 way that people start businesses in this country (no one Angel invests in a hot dog stand)
      - jacquesm 17y ago
        Yes, but hot dog stands are not the kind of things that we're talking about in this context. High tech, high risk start ups typically do not walk in to their bank managers office to get a few tens of thousands up to 100K loan to start their business, they're lucky enough to get an appointment in the first place. Banks like to borrow where there is collateral, a typical tech start up will invest in people and a little bit of hardware. Typically that hardware will be worth 0 if the company should fold. A hot dog stand can at least be sold to the next guy that wants to try his luck. Angels not investing in hot dog stands prove my point, they don't detract from it. Banks will gain if they get more business because of this, since angels do not invest in to that kind of business the banks already have it, and the kind of investment that angels do will not be touched by banks. Do you personally know of a high tech business that got its first capital from a bank ? Do you know of a high tech business that got its first capital from an angle or more than one angel investor ? For me the score is exactly 0 for the first and 20+ for the second. (where I know one or more of the founders personally)
        SamAtt 17y ago
        I don't buy that. Your whole argument is based around assets being worth enough to mitigate risk and they simply aren't. Taking the hot dog stand for example they're going to spend most of their money on merchandise and rent which aren't assets that can be repossessed. For those few assets that can be repossessed a bank has to go through petitioning a court to give them permission to repossess, then they have to pay someone to repossess the merchandise and then they have to pay to auction off the merchandise. That's a lot of money to spend for what amounts to some tables and a grill. The same is true of most new businesses. Even those that create assets in their product (since the bank has to sell off something that people clearly weren't willing to buy from the original business). As for high tech firms my whole point was that banks can't compete with Angel investors right now but if this law passes they'll have limited options which will push them towards the banks (which in turn is exactly what the banks want)
        jacquesm 17y ago

So umm.. who wins if these limits are successfully put in place?

david927 17y ago

Something like this: http://www.me-vc.com http://www.me-vc.com

SamAtt 17y ago
I'm sure that company will too but on a larger scale I think Banks win. Angel Investors compete with small business loans and generally win since small business loans require you start paying them back right away where as angel investors just take a piece of the company. So if Angel investments become prohibitive it will force wannabe entrepreneurs into the waiting arms of the banks.
- jacquesm 17y ago
  Angel investors do not typically compete with small business loans because these companies would not in a million years get money from a bank. Angels invest exactly in those that can not get money from banks because they are too high risk. Once a business is established and has a balance sheet with some assets on it you can start thinking about applying for a regular loan. For small businesses at the 'start-up' level it would be great if they had access to bank loans for their needs, since borrowing from a bank is much cheaper long run than from an angel (after all, the bank does not take equity, only interest). Has anybody here ever gotten money from a bank based on a non-existent business?
  - SamAtt 17y ago
    I'm sorry but you're just wrong here. This is the first link that comes up on Google when you search for "Small Business Loan": http://www.merchantloans.com/ http://www.merchantloans.com/. The first item listed under that heading is "Start/buy a business or franchise" This About.com article (http://sbinfocanada.about.com/cs/financing/a/getbusinessloan.htm http://sbinfocanada.about.com/cs/financing/a/getbusinessloan...) starts by saying... "Sooner or later most small businesses need to get a small business loan, whether to get the operating capital for business startup or to finance an expansion. " Small Business Loans are the #1 way that people start businesses in this country (no one Angel invests in a hot dog stand)
    - jacquesm 17y ago
      Yes, but hot dog stands are not the kind of things that we're talking about in this context. High tech, high risk start ups typically do not walk in to their bank managers office to get a few tens of thousands up to 100K loan to start their business, they're lucky enough to get an appointment in the first place. Banks like to borrow where there is collateral, a typical tech start up will invest in people and a little bit of hardware. Typically that hardware will be worth 0 if the company should fold. A hot dog stand can at least be sold to the next guy that wants to try his luck. Angels not investing in hot dog stands prove my point, they don't detract from it. Banks will gain if they get more business because of this, since angels do not invest in to that kind of business the banks already have it, and the kind of investment that angels do will not be touched by banks. Do you personally know of a high tech business that got its first capital from a bank ? Do you know of a high tech business that got its first capital from an angle or more than one angel investor ? For me the score is exactly 0 for the first and 20+ for the second. (where I know one or more of the founders personally)
      - SamAtt 17y ago
        I don't buy that. Your whole argument is based around assets being worth enough to mitigate risk and they simply aren't. Taking the hot dog stand for example they're going to spend most of their money on merchandise and rent which aren't assets that can be repossessed. For those few assets that can be repossessed a bank has to go through petitioning a court to give them permission to repossess, then they have to pay someone to repossess the merchandise and then they have to pay to auction off the merchandise. That's a lot of money to spend for what amounts to some tables and a grill. The same is true of most new businesses. Even those that create assets in their product (since the bank has to sell off something that people clearly weren't willing to buy from the original business). As for high tech firms my whole point was that banks can't compete with Angel investors right now but if this law passes they'll have limited options which will push them towards the banks (which in turn is exactly what the banks want)
        jacquesm 17y ago