Credit cards · Financing

Can you recommend a credit card for short-term financing in an early stage company?

Mike Whitfield Sr. Software Engineer, EPAM, Google

May 13th, 2015

There are all kinds of cards out there, first of all is this something you recommend against and why?

Second of all, if you think a business line of credit is acceptable, what are some cards you think align well with the typical costs for a software SaaS/PaaS business in the data mining space?

Edward Robertshaw Started TinyCall

May 13th, 2015

Founder dating forums are not for reviewing specific products or websites. It's the wrong place for it as it only helps you (I dont make the rules).

That said, your website sucks (as do the above descriptions you just listed). It looks tired. There is no call to action and its confusing for normal people (they wont read paragraphs of text ever). Sorry, I know how that sounds. None of this is uncommon at the stage your company is at. Try getting some feedback on reddit (if brave), or ask friends.

You need them to be able to tell you back and no prompting just them and 5 second look at your site:
- what problem is the business solving?
- whats the value ad?
- whats the call to action for the visitor? Sign up? 

I am also limiting you to 10 words. Then I want to know it in 3 words.

Maybe you need a business founder who can help (and give them founder level equity, no more posts about 2%).

Tough love here but I am being honest and real with you.


Edward Robertshaw Started TinyCall

May 13th, 2015

You typical borrow money if you have a cashflow issue. Example: you need to order the parts to make up an order and ship it but don't have the cash for parts. You can then lend against the invoice and hopefully all goes well and you pay the lender back once the order has been paid by the client.

You typical take investment, when you have a cool idea and you need cash to set up the operation and you sell a stake in the company to someone with cash to make it happen.

Specifics on lending will come only from lenders. They will review you based on what you have and how risky you are (and you sound high risk).

Just to restate. IMO, fixing your messaging so investors/advisors understand you better, thats likely your best bet. If you make ugly UI. Consider a service like http://www.sketchdeck.com/ . 

I found this on your site http://www.spiritway.co/hostwise . It looks like it does some cool stuff potentially investable stuff. I had to hunt for it though and its UX and cosmetics don't do you justice. Also, when I type your naked URL in I get a blank page. These are red flags to investors, that you make just make tech and are not building a company.

If you can earn good money, earn the money and pay out of pocket from not debt. Do consulting on the side (that's what I do with aperations while I am ramping up Tinycall). 

I know of companies (on a personal level) that have used credit card debt as you describe and I give you my warning, its a very dangerous game to play. From what I see from you, you shouldn't be at that stage yet. where its logical.

Using money from investors to grow your business, should be your goal. Investors make money by investing in companies and selling the stock after the value goes up or from dividends, aka they win if you win. 

Banks/lenders, have cash (often other peoples cash) and make money lending it (not 'investing'), they don't like to take on risk so they want assurances that if you fail they still get paid back, they then make money through interest (which is not tied to your success). These are very different models.  

To be fair, if you did a credit card/bank loans route and it paid off, you could do well out of it. So long as the company succeeds and you can pay back the debt. It's cheaper than giving up % of your company to investors and may get you funds faster. Just know you have to live with the downside if it fails. Consult your accountants and legal people so you understand the risks fully though! 

I've seen VC's tell founders to max out credit cards before "if they believe in the business". It's crazy IMO to not share the failure risk. If you need to use a credit card to fund the business, you can't afford to that level of risk. On the other hand, if you have $1M in the bank, it might not sound risky at all..... 

Do the easy fixes first! Then ask for feedback on your pitch from people you consider friends and take it from there. Forget the credit cards. 

Edward Robertshaw Started TinyCall

May 14th, 2015

You got more response as you added follow up questions.

Don't take this stuff personally. I've done a lot in this space. This is a community where people help other people.

Mike Whitfield Sr. Software Engineer, EPAM, Google

May 13th, 2015

Hey if you're an all-star that can wear moose in their hair and make it look suave you're my guy!!! Sent from my iPhone

Edward Robertshaw Started TinyCall

May 13th, 2015

If you have other assets (like a house), you might get a better deal lending against that for cash. Go to your local bank and ask these questions (then shop round for the kind of loan the makes most sense for you). Nobody here (including me) can or should advise you on the specifics of debt. I personally recommend you stay clear or it for doing a tech startup. You have plenty of risk already with the start up and the loss of opportunity cost.

I've been through 500startups twice and through VTF. I've seen a lot of start ups including my own. If you can't get outside investment, there is likely something wrong with your business.

Look for advisors who can help you, then get them to help you fund raise. It's not hard to sell GOOD ideas.

Looking at your website http://www.spiritway.co/ and as a tech person and start up founder: I have no idea what you guys do (not asking you to tell me, just saying what investors will see). I think you have a marketing problem at the very least.

Mike Whitfield Sr. Software Engineer, EPAM, Google

May 13th, 2015

Hey Edward, I'm a bit surprised by the volume of responses you've given to this thread.  I don't exactly appreciate some of the feedback you're giving, but moreover it also kind of detracts from the value generation intended for other people.  I'm sorry if you had a bad experience pitching or one of your friends did.  I'm not sure the amount of advice you're providing is solicited.  Moreover, the cross-reference of another thread I posted feels a little inappropriate.  Next time, better to reach out to someone over PM.

Topic is using credit cards to finance an early stage company.  Discussion is alternative sources of funding.  What are the pro's/con's.  If deciding credit cards, what are the important data points to follow.  What are other folk's experiences?  Etc. etc.

Mike Whitfield Sr. Software Engineer, EPAM, Google

May 13th, 2015

Nonetheless, let's get back on topic.  There is the status quo and then there's solid logic.  I'm hearing status quo (e.g. statistically this is what *other* companies do).  The jist of how banks differ from private investors is clear, except I'm still not convinced that I can solicit a private investor right now without selling them hard on the business (and this doth not maketh a good relationship).  I'd like some users first, and I'd like a more solid group of supporters/a team in place before seeking capital.  I'm seeing a lot of risk with no promise of return for capital seeking activities and I'm seeing high risk and little time cost for a credit card.

Still seeking a more complete dataset of debt capital (what is a good interest rate, how is a competitive rate established).

Mike Whitfield Sr. Software Engineer, EPAM, Google

May 13th, 2015

Can you explain said risk?  Can you explain said stress and how does it differ from a different financial stakeholder?  Options are crowdfunding, accredited investor pools, and angel investment. 

Mike Whitfield Sr. Software Engineer, EPAM, Google

May 13th, 2015

Yea; marketing problem has been ringing in my ears for 6months :)

For instance, here's a question you might have asked, "even if I get what the business does, why is it called 'Spiritway'?"

This might prompt me to ask a different question, start a different thread. :)

Edward Robertshaw Started TinyCall

May 13th, 2015

I've decided you should register wecrawlanysite.com as it's not even registered :)