Let’s start with an example. If you were Chinese and immigrating to San Francisco, you could not go to a Bank to borrow money to get into business. You would make a presentation to a local group of business people, probably known privately as the Circle.
They would vet the economics of your proposal before the meeting. But during the meeting, their questions would be different. Not the typical how much will we make on our money or when will you sell for huge multiples, etc. Their questions would be how many jobs will you create, how many people will you be able to sponsor from China, will you buy real estate, and who around this table will be your vendors?
Based on those answers, they would make their decision. If approved, they would call the business owner back in and hand him/her a check for the total amount needed. There would be no obligation to pay it back and no ownership conveyed to the Circle. The only requirement is that the next time the Circle met, the new business owner would take the next chair in the Circle and contribute a proportionate amount in the next ventures.
We don’t go that far but our concept is simple.
The funding amount is smaller, $10,000 to $50,000 per transaction, per funder. We would rather you do more deals than put more money in one deal. We look at the economics of transactions and usually limit our perusal to existing businesses of three to five years, rather than start ups.
Again, we want to know about jobs, local investment, etc.
Our members are business owners or key employees who are looking to get a better return than the 2% or less that is available to most right now. These investments are ideal for a self-directed IRA. In addition, they have a vested interest in building local businesses.
An example of funding is Pedernales Brewing Company, which did an initial offering of $1,000,000 with 100 investors at $10,000 each. The idea is to spread the risk and use money that, while our members would not want to lose, they are willing to risk to be able to say that they are owners or funders of the venture.
For more information or receive an application to join, contact Jim Montgomery at 210-690-3700 or send an email to firstname.lastname@example.org.