update March 23

Whew. Today was a rollercoaster day.

My friend Wendy wrote with an idea for how we could raise money: sell "shares" of, say, 1000 Euro each, to friends and relatives, and at the end of each year hold a lottery and pay back, say, 10 people. I thought, hmmm, it sounds like something another friend, David, had recommended. I wasn't too hopeful that we could raise enough for the 40% that a bank needs to give a mortgage, but probably we could raise enough for start-up costs, if we could negotiate a rent-to-buy contract with the owners. It "just" involves convincing a few hundred people that we are a good risk, but I am quite certain we could do that -- this is a great project. Fun, socially and environmentally and culturally responsible, and my latest "best guess" for profit is 25,000 Euro per month (which we would then divide between banks, other lenders, and the tax man.)

I wrote back to her, and David, asking them to please tell me more.

In the meantime I had an email from Lilianne, Nellie and Victor's real estate agent. She was glad to hear that I am actively busy, but wanted to have a clearer idea how it was shaping up for us financially. The owners, she said, were not really that interested in any option other than selling the house. Reading between the lines, I got the idea that they were getting impatient and perhaps had other potential buyers. Oh dear. All my work and dreams for nothing?

Luckily I also had an email from David. He "scolded" me: what am I doing, putting limits on what is possible before I even start? Why do I think I can't raise 40% of two million in a creative way? He explained more, and I followed up with some internet research... (I hope I got it right, David...): his recommended way of starting up a new business is called working with seed capital. A person goes around to lots of regular folks, convinces them that he has a great business idea, and asks if they can lend a small amount of money to get it started. 500 Euro, say, or any multiple of that. If the person says yes, then you agree on the details: how long can they spare the money and can they lend it interest-free, perhaps in exchange for a gift-certificate at the future business? You put everything in a contract and sign it. Then, when you a nice collection of contracts, you go to bigger investors and see if they will join in. And after that you go to a bank. In the end, a typical division is 33% seed capital, 33% bigger investor(s), and 33% bank. And, David has a financial advisor whom he recommends highly, who could explain more and help us out. So....

I wrote an email back to Lilianne (with copies to Wendy and David and others) saying, we understand that a rent-to-buy arrangement is less than ideal (although if it wasn't 100% off the table, we could get some expert advice from Paulien in Deventer on how to set that up...) And if they have other potential buyers with money in hand, naturally that is more interesting than waiting for us to gather our finances. But that we still have hope, thanks to this seed capital idea. I explained the 25,000 per month expected profit, and that I am almost done with a first version of our business plan, which we will take to several experts for their feedback. If they can confirm that our numbers are realistic, then we can approach people more confidently to ask for seed capital. And PS to David: yes! please connect us with your financial advisor!