I am planning to launch a social networking site.The business model is to sell online advertising spaces.I have a business plan ready and am considering seeking angel investment money.
The problem is that I can't decide on the following questions:
1) How much money should I ask? My start up cost is around $150K
2) How much equity do I offer?
3) What are the chances of me getting the fund? If not, what strategies should I use?
Let say I want to ask for $ 500K for 40% equity ownership of the business. Should I:
Option A
Ask for $500K for 40% of the business up front? or
Option B
Ask for $300K for 40% with an option that I may ask for more money in the future?
I am pretty aware that it's not a cake getting angel investments - but I truly believe that the idea has growth potential.
I am looking for serious answers. Preferably answers from entrepreneurs who had similar experience.How to evaluate my business idea?You will be never given any investment if you have not started yet and the amount of money you asking is not realistic. Also you do not have other website with the HUGE of traffic which can transfer to the new site. Planning is good but it'll be not what you think. You have to spend a lot of money for advertise your site and it's look like 50/50 gambling if you do not know how to be the top rank in search engine. What is it? Try to google %26quot;aarp games online%26quot; then you will see my site www.aarpgamesonline.com which age 2 weeks in the 1st page of results. This is SEO competition!
If you do not have the HUGE amount of traffic then no one will invest with you because it looks like throwing money into the river. Your plan is basic plan of almost webmaster thinking but they did and they already sold ads space.
By the way, are you thinking about hiring programmers to make your own social network? If the answer is %26quot;yes, it will take a lot of money.%26quot; then it's mistake because there is a good engine which you can start your perfect social network with $610 and full features such as music sharing, video sharing, chat%26amp;IM, photo albums, blogs, event and other. Try it in my source. You never need angel investment but your self and get money for your success.
