Fundraising broker · Loans

Would an institutional investor consider being a guarantor for a seven figure loan to a startup?

Anonymous

April 7th, 2017

My early stage startup’s partnered with a F500 company that projects 8 figure revenues within 2 yrs. The partnership’s attracted a loan offer for our full seed raise from a real estate investment group, but it’s dependent on an institutional investor being a guarantor. 4–5% interest rate deferred for 1 yr. In theory, this should be more attractive to an investor than directly putting up the money, but I wonder if this is usual or not; don't want to spook investors with something too weird.

Dane Madsen Organizational and Operational Strategy Consultant

April 7th, 2017

Try a venture bank.

Andy Freeman Product Management and ... - Looking for new opportunities

April 9th, 2017

Why would an investor want that kind of risk for 5% return?


BTW - what interest rate is the "real estate investment group" getting? Since they're asking for little/no risk (the guarantor is taking the risk), the "market rate" is somewhere around 1-2%. I suspect that they're demanding a lot more than that.


It's interesting that you talk about revenues, not profits....


Anonymous

April 9th, 2017

Hey Andy, few clarifications:

- the real estate group offering the loan is getting the 4-5% interest rate

- the projections are for 8 figure profits


I'm trying to figure out how much equity to offer potential guarantors. Also trying to determine if this is even worth presenting to potential guarantors. I'm a first-time entrepreneur, so any advice would be appreciated. If you share your email, it'd be great to give you a quick overview and get your feedback.


Thanks,