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Business Model /
Questions And Answers

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Changed: 3,4c3,6
===In which investment size the <n>P2PVenture</n> should operate? =
Could be micro-loans, 20k ($ or €), 100k, 500k,.. The dynamics of creating a community of investors will create a ceiling to the reasonable amount a coherent "coalition" of investors can put on the table.



===What is the typical profile of the target enterprises seeking financing through <n>P2PVenture</n>?=

Changed: 9c11,12
Hi, I'm an Ex High Tech Ceo and now working in the M&A sector in Paris. I believe P2P venture could be (will be) a very attractive for the 1st Bizangels round and also for getting venture money; (business angels provide all together around 250K€ up to 500K€, each one providing from 5K€ to 200K€; venture starts from 1M€ to 5M€, at least in Europe...). At that stage of financing it s not so easy to afford loans due to the fact that the company is not cash flow positive, but it is possible, loans cant be guaranteed by convertible shares...). Very interesting subject and many ways to leverage financing (fiscal subsidies for the investor etc.). Congratulations for Barcamp, very good initiative ! -- PatrickLardant
Discussion moved to Enterprise Profile


Changed: 11c14,15
Hi Patrick and welcome to P2PVenture. We are having BarCamp:BarCampBank3 this week-end and will be discussing the subject. I see that you registered for the event, we'll have the opportunity to meet and discuss further in persons.

===In which investment size the <n>P2PVenture</n> should operate? =
Could be micro-loans, 20k ($ or €), 100k, 500k,.. The dynamics of creating a community of investors will create a ceiling to the reasonable amount a coherent "coalition" of investors can put on the table.

Deleted: 13d16
I think that a typical BA size is definitely a possibility and requires full analysis. Several people are currently thinking over the subject and some of them will be physically present tomorrow on BarCamp:BarCampBank3.


Changed: 15c18
I'm wondering if there would not be another matching market between very small businesses and former professionals (like a baker who wants to start a new bakery in the regions and looks for money from current and former bakers everywhere in the country).

Discussion

Changed: 17c20
Both subjects are not mutually exclusive and feedback from online discussions and physical discussions at BarCamp:BarCampBank3 will certainly help to understand how things could be positioned. -- FredericBaud
Discussion moved to Investment Size Discussion

Added: 18a22
===What is the standard profile(s) of the investor that will seek investments through <n>P2PVenture</n>? =

Added: 19a24
Discussion

Added: 20a26
Discussion moved to Standard Investor Profile Discussion

Changed: 28,34c34
Hi all.
The question is debt or private equity ?
If we speak about Venture or seed money, this means that the scope is to fund an innovative start-up, requiring money for structuring, for engineering, for going to the market etc. This type of company is loosing money during 1 to 3 years (even much longer for biotech cies). After this "investment period", the company will make profits. As a consequence, the first period is not a free cash flow positive (not profitable and even more not FCF positive). So equity looks much better than debt !
On the other hand, the start-up could be funded thanks to debt if this debt is for instance a loan with an "in fine" reimbursement and with a "convertible warranty"... -- PatrickLardant

I think one the basic difference from an investor point of view between debt and equity is that debt bears basically the same level of risk than equity (will the startup work at all, linger for years or disappear), but liquidity is slightly better (you can possibly retrieve some level of cash in case of bankruptcy and even can assure some pay-back if a tradeable asset is offered as a collateral). In return pay-off is caped. so volatility is bigger on equities - for the better.

Now from the technical side, debt may be easier to implement technically for a startup. Equities involve to adopt a certain type of legal entity (SA or SAS in France) to be able to trade the shares of the company and involve.

Discussion moved to Debt vs Equity Discussion

Deleted: 36d35
Basically from the investor side, the question is should it adopt the VC bank model or the Venture Capitalist model. -- FredericBaud

Changed: 38,42c37
Equity financing is a form of financing without incurring debt; without having to repay a specific amount of money at any particular time. The major disadvantage to equity financing is the dilution of your ownership interests and the possible loss of control that may accompany a sharing of ownership with additional investors.
From the lender's perspective, the debt-to-equity ratio measures the amount of available assets or "cushion" available for repayment of a debt in the case of default. Excessive debt financing may impair your credit rating and your ability to raise more money in the future, and for a start up it may be impossible to get any loan unless you can provide a due collateral. If you have too much debt, your business may be considered overextended and risky and an unsafe investment. In addition, you may be unable to weather unanticipated business downturns.
On the other hand, a mature company having a lot of equity and no debt may be considered as not being very well "leveraged" and as not having the best profit return on equity.

Lenders will consider the debt-to-equity ratio in assessing whether the company is being operated in a sensible, creditworthy manner. Generally speaking, a bank will consider an acceptable debt-to-equity ratio. For startup businesses in particular, the owners (and lenders) need to guard against cash flow shortages. Lenders will look at cash flows, debt/equity ratio and... collateral. PatrickLardant
===What are the different economic/legal markets for <n>P2PVenture</n>? =

Added: 43a39
Should P2PVenture be global, mutli-currency from the start? Most probably because of legal issues, the different "instances" of P2PVenture could be started in different spaces (e.g. working in $ in the US; working in $ in the Euroland, in selected Western-European countries, in national euro-market because of local regulations or difference in business culture; in ¥ in Japan;...)

Changed: 45c41
===What is the typical size of the target enterprises seeking financing through <n>P2PVenture</n>?=
===Does <n>P2PVenture</n> offer a better deal than current solutions or a deal no-one covers now? =

Added: 46a43
The question is if P2PVenture will cover certain deals that are currently handled by banks of VCs but do it in a more efficient way that these institutions do for these type of deals (and why it is more efficient should be very clearly explained). Or will it provide investments in an economical way to enterprises that are currently out of the loop and opportunities for investors' money that currently are offered unattractive returns?

Deleted: 49,50d45
Start-up looking for 250K€ up to 500K€ -- PatrickLardant
===What is the standard profile(s) of the investor that will seek investments through <n>P2PVenture</n>? =

Changed: 52c47
Discussion
Discussion moved to Disruption or Lower Discussion

Deleted: 54,56d48
My current thinking is that it could be key to the different business models. A P2PVenture platform gives access to a "virtual" fund: The sum of the potential investors that are connected to the platform and whose savings allocated to venture investments is potentially available for actual investments once a project has been selected. To make it simple, we can think that there are several ways to equate a €200M fund. 2M potential investors ready to invest on average €100, 200.000 potential investors ready to invest €1000,...., 2000 potential investors ready to invest €100.000.

We see that depending on the average amount per investor, we are dealing potentially with different profiles. Depending on the number of investors necessary to equate a €200M fund, we are also dealing with reality constraints (is there this number of available investors in the actual population for this amount?), then there is a sizing issue (sizing of the platform, of the means to get the investors connected,...).

In fact, it made me realized that the vast amounts of money available for institutional investors (pension funds, insurance companies) are usually the result of money collected on a very large number of individuals and accumulated on a long period of time. I suppose that the choice of the target profile of investor population is key in the strategic process. Once the population is defined, the type of projects that can be funded may possibly be deduced from this population ability to screen and contribute (in cash, knowledge and network) to the project. -- FredericBaud

Changed: 58,59c50,51
Well, yes but the other hand is also possible: you screen projects that require to be funded and then look for investors.
Actually this is the most common way already under process. Yes there can be various business models and we ll to find various win win models for investors and projects and solve the chicken and egg issue. PatrickLardant
===What should be the compensation model for the <n>P2PVenture</n> Platform? =
Should P2PVenture be compensated on transaction fee, a subscription from investors, a carry interest...

Deleted: 61d52
===What are the different economic/legal markets for <n>P2PVenture</n>? =

Deleted: 63d53
Should P2PVenture be global, mutli-currency from the start? Most probably because of legal issues, the different "instances" of P2PVenture could be started in different spaces (e.g. working in $ in the US; working in $ in the Euroland, in selected Western-European countries, in national euro-market because of local regulations or difference in business culture; in ¥ in Japan;...)

Changed: 65c55
===Does <n>P2PVenture</n> offer a better deal than current solutions or a deal no-one covers now? =
Discussion

Changed: 67c57,58
The question is if P2PVenture will cover certain deals that are currently handled by banks of VCs but do it in a more efficient way that these institutions do for these type of deals (and why it is more efficient should be very clearly explained). Or will it provide investments in an economical way to enterprises that are currently out of the loop and opportunities for investors' money that currently are offered unattractive returns?
Discussion moved to
P2PVenture Plaftform Compensation Model
This page is listing the really important questions (and with time all the adequate answer) that relate the understanding of the P2PVenture's BusinessModel.

What is the typical profile of the target enterprises seeking financing through P2PVenture?

Discussion

Discussion moved to Enterprise Profile

In which investment size the P2PVenture should operate?

Could be micro-loans, 20k ($ or €), 100k, 500k,.. The dynamics of creating a community of investors will create a ceiling to the reasonable amount a coherent "coalition" of investors can put on the table.

Discussion

Discussion moved to Investment Size Discussion

What is the standard profile(s) of the investor that will seek investments through P2PVenture?

Discussion

Discussion moved to Standard Investor Profile Discussion

Should P2PVenture work on debts or private equities?

Discussion

Discussion moved to Debt vs Equity Discussion

What are the different economic/legal markets for P2PVenture?

Should P2PVenture be global, mutli-currency from the start? Most probably because of legal issues, the different "instances" of P2PVenture could be started in different spaces (e.g. working in $ in the US; working in $ in the Euroland, in selected Western-European countries, in national euro-market because of local regulations or difference in business culture; in ¥ in Japan;...)

Does P2PVenture offer a better deal than current solutions or a deal no-one covers now?

The question is if P2PVenture will cover certain deals that are currently handled by banks of VCs but do it in a more efficient way that these institutions do for these type of deals (and why it is more efficient should be very clearly explained). Or will it provide investments in an economical way to enterprises that are currently out of the loop and opportunities for investors' money that currently are offered unattractive returns?

Discussion

Discussion moved to Disruption or Lower Discussion

What should be the compensation model for the P2PVenture Platform?

Should P2PVenture be compensated on transaction fee, a subscription from investors, a carry interest...

Discussion

Discussion moved to P2PVenture Plaftform Compensation Model

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