The loan clause is tucked away under FAQs instead of next to the 20k amount on homepage. How convenient... pickup that bat timmy.. hit him square on his head... :)
Let’s mug a startup founder
31–40 of 80 posts
Re: Let’s mug a startup founder
#32Earlier quoted context omitted.
This sounds a bit suspicious to me, i.e. I couldn't help but reading this in a fake Brooklyn/Jersey accent wise guy accent. How are such loans handled in the UK regarding liability? I mean, if you have a limited company, does one of the founders have to vouch for it with his personal possessions (as it's often handled here in Germany, for obvious reasons)? Yes, if you're doing good, they won't be hasty in getting the…
Reason number seven million we are not registered in Germany. Seriously, though, how difficult is it to get a limited liability going in Germany? Moving there next month.
Pretty easy nowadays. The traditional way is the GmbH, which required you to have a capital of 25k Euros. Now as we're in the EU, you could register your company everywhere and lots of countries provided you with easier access to limited liability. As an answer to this, there's a beginner's version, the "UG", where the lower limit of starting capital is 1 Euro and unless you have more than three founders, there are form letters that make the legalities very easy.
Re: Let’s mug a startup founder
#33Sometimes I wonder if the guys who are providing the hosting, logo, font and design services are the ones making the money, not the startup founders. Web startups can depend on many paid services to make a web app work, yet not sure if their own web app can make money at all.
Re: Let’s mug a startup founder
#34Earlier quoted context omitted.
This sounds a bit suspicious to me, i.e. I couldn't help but reading this in a fake Brooklyn/Jersey accent wise guy accent. How are such loans handled in the UK regarding liability? I mean, if you have a limited company, does one of the founders have to vouch for it with his personal possessions (as it's often handled here in Germany, for obvious reasons)? Yes, if you're doing good, they won't be hasty in getting the…
In the UK the liability of directors is limited to the nominal value originally invested (usually £100).
Thus limited, this isn't that much different in Germany. I wasn't really asking about the legal ramifications, but how the banks treat it (and if this incubator does it differently).
Let's say a director of a limited company with a low capital (UK Ltd, German UG etc.) wants to take out a loan on the company. The default risk would be pretty high, and so it's standard practice that the loan contract includes and additional clause that the director is directly liable. Doesn't change the law itself, just an additional contractual obligation.
That's why I'm interested in how the UK banks (and/or this incubator) would treat this. Either they do it the same way, the state takes care of such losses or they're much more eager to accept risks than banks here (which, given recent history, wouldn't surprise me either).
20k GPB for 6% strikes me as rather high, as -- never mind all the aforementioned scrutiny -- getting a loan that high isn't really that much of a deal.
Re: Let’s mug a startup founder
#35Sometimes I wonder if the guys who are providing the hosting, logo, font and design services are the ones making the money, not the startup founders. Web startups can depend on many paid services to make a web app work, yet not sure if their own web app can make money at all.
If you want to make a good living with little risk, be a dev, a designer or something like that. Given that most startups fail, and of the ones that don't, most are only modestly successful, you'll probably be better off (from a purely economic standpoint) as a paid employee (or service provider) to a startup than as an entrepreneur starting one up. I think there's something magical (insane?) about doing your own startup.
Note: I don't have the hard data about this, but this seems to be the consensus (although those people never presented their data) and my anecdotal experience. Please, tell me if I'm wrong :)
Re: Let’s mug a startup founder
#36Almost all incubators aren't worth the time/equity given up. My startup applied for YC and (having not made it) will not be pursuing any others. We may apply for YC again, not for the money but the experience and the alumni. Experience and Alumni.
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Re: Let’s mug a startup founder
#37Earlier quoted context omitted.
In the UK the liability of directors is limited to the nominal value originally invested (usually £100).
Thus limited, this isn't that much different in Germany. I wasn't really asking about the legal ramifications, but how the banks treat it (and if this incubator does it differently). Let's say a director of a limited company with a low capital (UK Ltd, German UG etc.) wants to take out a loan on the company. The default risk would be pretty high, and so it's standard practice that the loan contract includes and addit…
I know nothing of this incubator, but I've heard that banks often ask for personal guarantees. There are various cases I've heard of where the business has failed and people have lost their homes, which were used as guarantee.
It probably comes down to what can be negotiated and I think it's mostly the same as you describe in Germany: Liability is limited unless you agree that it is not.
As a side note, I've had personal experience of one fund which hoped to get back the money given regardless of success or failure. I declined to get involved with them.
Re: Let’s mug a startup founder
#38Earlier quoted context omitted.
It doesn't say anything about not having to pay it back if you don't reach profitability. Their answer to "Do I have to pay back the pre-seed funding?" is "Yes".
Did you stop reading right there? Here's the next line - > When do I have to pay the pre-seed funding back? Don’t worry, we really don’t want you to hand over the keys to your house or car – this is a soft loan. Our interest is in your success and therefore will only look for the loan to be repaid when it makes sense for your business. This will be done on a case-by-case basis. It makes it sound like the loan is to t…
How did you conclude "loan is to the business - with limited liability, you don't have to pay it back if the business fails." from "will only look for the loan to be repaid when it makes sense for your business. This will be done on a case-by-case basis."? I won't.
It just means, they rather discuss the terms of loans individually, on case to case basis.
Re: Let’s mug a startup founder
#39Sometimes I wonder if the guys who are providing the hosting, logo, font and design services are the ones making the money, not the startup founders. Web startups can depend on many paid services to make a web app work, yet not sure if their own web app can make money at all.
If you want to make a good living with little risk, be a dev, a designer or something like that. Given that most startups fail, and of the ones that don't, most are only modestly successful, you'll probably be better off (from a purely economic standpoint) as a paid employee (or service provider) to a startup than as an entrepreneur starting one up. I think there's something magical (insane?) about doing your own sta…
Except the founder gets paid either way, and paid more than anyone else usually. If the business goes bust nobody takes his house, or his things - he just finds another job or starts another business with VC welfare.
Re: Let’s mug a startup founder
#40So that's around $33k USD. They're only looking to be paid back if you reach profitability. 6% equity to get a $33k loan and some sort of training/advising for 13 weeks at their facility, and office space afterwards? Could be a good deal, especially if you have a new business that requires medium amounts of capital costs to get started. If you're getting something manufactured and your first run/prototyping/etc is go…
The whole reason I wrote the post is because they're acting as if it's normal to ask for equity for a loan (and a tiny loan at that). YC, TechStars, Seedcamp, etc all invest in their companies - not loan them money. The whole thing smacks of a rich guy who just thinks he can throw around his money, call it an 'accelerator' and take candy from babies. I'm doubly angry because here in the UK, we're struggling to get su…
Slightly OT: You may want to remove hyper-linking to them in the article. You do not intent to promote them, right?