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> I think you're getting at the crux of it here. The question is, how does one of these businesses "prove" to investors that they are less likely to fail? By h

by sgift 4y ago

> I think you're getting at the crux of it here. The question is, how does one of these businesses "prove" to investors that they are less likely to fail? By having a business plan. That's why banks (at least over here in Germany) ask for one when you ask for a loan. You present a plan, someone reads it, you talk it through, clarify a few things and if everyone is happy they give you a loan and you start (or grow) your business with it.

webmaven 4y ago
> You present a plan, someone reads it, you talk it through, clarify a few things and if everyone is happy they give you a loan and you start (or grow) your business with it. In the US, unless you can put up property like a house or land as collateral, or plan to use the loan to purchase recoverable assets like industrial equipment (I suppose a data center would qualify, but actual computer hardware depreciates faster than banks like), you won't get the loan, even if it's a local bank you're approaching. In theory a software business could use IP assets as collateral, but that usually doesn't apply to new software businesses. Getting to the point where a software business could get a business loan from a bank more or less requires bootstrapping.
cseleborg 4y ago
> they give you a loan Yes, they do, if you can provide a security for the loan. More often than not, the founder is the guarantor, which sucks for them if the business fails. This is moderately founder friendly, to say the least.
- fxtentacle 4y ago
  In Germany, there's the option to have the government secure your loan towards the investment bank. For the founder, that means you get capital into your new company and only the company is legally liable for it, but not you personally.
  - deleted 4y ago
    [deleted]
  - no_wizard 4y ago
    This seems to be why Germany has a lot of healthy middle / medium sized businesses, if indeed true on face value. This is what the US should really subsidize, the ability to bootstrap and start a new business, especially first time business owners. I know the SBA does some things around this but it is very much focused on "mom & pop" type stores, I don't know of any software businesses started with an SBA loan (though I imagine due to time and volume, there probably is one). I think taking the risk out of it in this way would be a huge economic win, but it would definitely not be popular with the incumbent businesses that have the dominate lobby voice in US politics.
  - cseleborg 4y ago
    That's what I did, and that's not how it works. The Bürgschaftsbank guarantees the loan in case the founder fails to repay. I'm going through that right now.

by sgift 4y ago

webmaven 4y ago

> You present a plan, someone reads it, you talk it through, clarify a few things and if everyone is happy they give you a loan and you start (or grow) your business with it. In the US, unless you can put up property like a house or land as collateral, or plan to use the loan to purchase recoverable assets like industrial equipment (I suppose a data center would qualify, but actual computer hardware depreciates faster than banks like), you won't get the loan, even if it's a local bank you're approaching. In theory a software business could use IP assets as collateral, but that usually doesn't apply to new software businesses. Getting to the point where a software business could get a business loan from a bank more or less requires bootstrapping.

cseleborg 4y ago

> they give you a loan Yes, they do, if you can provide a security for the loan. More often than not, the founder is the guarantor, which sucks for them if the business fails. This is moderately founder friendly, to say the least.

fxtentacle 4y ago
In Germany, there's the option to have the government secure your loan towards the investment bank. For the founder, that means you get capital into your new company and only the company is legally liable for it, but not you personally.
- deleted 4y ago
  [deleted]
- no_wizard 4y ago
  This seems to be why Germany has a lot of healthy middle / medium sized businesses, if indeed true on face value. This is what the US should really subsidize, the ability to bootstrap and start a new business, especially first time business owners. I know the SBA does some things around this but it is very much focused on "mom & pop" type stores, I don't know of any software businesses started with an SBA loan (though I imagine due to time and volume, there probably is one). I think taking the risk out of it in this way would be a huge economic win, but it would definitely not be popular with the incumbent businesses that have the dominate lobby voice in US politics.
- cseleborg 4y ago
  That's what I did, and that's not how it works. The Bürgschaftsbank guarantees the loan in case the founder fails to repay. I'm going through that right now.