Arbitrage opportunity

[Aquarians]

The OP isn't trying to recruit you to a scheme. He is essentially a founder, and someone like you (an investor) is giving him free money that he could either leverage into more money or use, i.e. he's not going to lose money and could make money. The word "arbitrage" isn't a good description of the situation, but it is essentially a free call option for him. He's just asking what would be a good way to leverage this to make money. Perhaps it's dumb money, government's trying to be angel investors often are, but it's apparently out there and he's getting it legally and it will have zero impact on you unless you're a Romania taxpayer, so not sure what the hostility is about?

>> The word "arbitrage" isn't a good description of the situation, but it is essentially a free call option for him.

Exactly, the term "arbitrage" might be misleading and carrying a negative conotation but I meant that mathematically. "A self-financing trading strategy ϕ is called an arbitrage opportunity if its value process V satisfies V0 ≤ 0, VT ≥ 0 and P(VT>0) > 0" ( https://quant.stackexchange.com/questions/31953/different-definitions-of-arbitrage ). The total value of the company I produced so far is V0 = 0. After getting the investment, researching what's to be researched and developing what't to be developed - completing the product that is, running my own capital (different from the investment I'm getting), sales and what takes, the total value of the company will be VT >= 0 since it could only be less than zero if I were in debt which is not the case, I'm running on debit not on credit. And PROBABILITY of having a valuable company is P(VT) > 0 (NON-ZERO!) since it would only be zero if I'd be after embezzlement, which again I'm not.

>> Perhaps it's dumb money, government's trying to be angel investors often are

I'm not commenting on this one since as a (potential) beneficiary I might not be totally objective Just saying that administration everywhere in this world is about way more needs and claims than actual resources available so it's inevitable for some to be dissatisfied.

The program I applied to has a budget of €477,000,000 and at about €38,000 per financed business minus administration expenses that's about 10,000 new businesses. That's the reason I said I wouldn't call you "competitor" if you'd be eligible for financing and apply too, there's enough in the pot so the competition need not be cut throat.

And this budget is pocket change compared to other EU programs like this one: "Horizon 2020 is the EU Research and Innovation programme with nearly €80 billion of funding available over 7 years (2014 to 2020)" ( https://ec.europa.eu/programmes/horizon2020/en/what-horizon-2020 ).

And yeah, all these investments may be dumb money and return nada, but those money are going out the window whether I apply or not. So it's almost a duty to try and get some since in spite of what some may think, (what the hostility is about?), I'm actually well-intended.

 

[Aquarians]

“How can I make this an arbitrage for external investors likeyou?”

“And I actually got a Californian VC interested in my venture although they were shy in actually letting loose actual money investment.”

Da fuck he’s not

VCs are NOT angel investors, I repeat, THEY ARE NOT ANGEL INVESTMENTS.

Anyways some people don't need reasons for being hostile, it's their nature.

 

[treeman]

Brilliant

 

[TrustyJules]

I work in Brussels, Thank you for posting the link to the program, I looked at the eligibility criteria and of course it is not as simple as you make it out to be. The program is meant to foster entrepreneurship and involves following courses, mentoring and so forth. The money is also not distributed by a lottery but based on the submitted data and business plan (I pass on the eligibility criteria which hopefully you pass).

The methodologies for evaluating the business plans are also posted but in PDF in Romanian - its too much work for me to plow through them but I doubt very much your business model would be eligible. 90%+ of European grant applications are rejected because the applicant did not comply with the formal procedural and submission requirements of the programme.

If you are truly serious about obtaining the grant money you should post a link to the business plan you must submit.

 

[Aquarians]

Well I'm dealing with both the state and EU so obviously it's bureaucratic and complicated, like 14 points of methodology for starters: http://startup.prois-nv.ro/finantare/concursuri/metodologie

Nevertheless, fundamentally it's as simple as I said: they finance new businesses on the same model that angel investors use. So if you have an idea, do apply and you may or may not get financed. But if you don't apply it's 100% you won't (get financed).

I'm enrolled in the program and yep, there are courses, which start on Monday, September the 5'th and have a duration of two weeks. After that I'm submitting that business plan that you request and I've no reason to publish it here, and that's about it until October when they announce a pre-selection of 100 business plans which will enter the next phase: a "pitch". 60 of them will get funded this round and those who get funded will start receiving money in January. Well, sort of, the companies (LLCs) need to be created starting from January.

>> I doubt very much your business model would be eligible

I don't think I've shared here full details of my business model. The accounting code would be "Activities of consulting in information technology" and they get the highest points, afterall car washes and dentist offices may bring some money now but could never scale to billions.

And if I don't get funded, no big deal. I've got the money and the plan to carry by my own nevertheless, EU funding would just gimme a boost.

 

[TrustyJules]

I've no reason to publish it here

You do if you want someone to pitch into your arbitrage idea.

 

[Aquarians]

I can drop *you* a private message after I've polished my pitch, so in about a month from now.

 

[ironchef]

You might want to do a deep dive into the concept of "real options", there's a good deal written about the concept and it's basically what you're describing. It's a very interesting way to look at life in general and I've found it very useful.
I am curious about the specific program you're citing. What is it called? (I'm not an EU citizen so don't worry, I won't be competing with you!).

I looked this concept up. I am going to read more about it.

I suggest one book for those interested:

"Real Options, A Practitioner's Guide" by Tom Copeland and Vladimir Antikarov - ppublished by Texere

 

[Sig]

I suggest one book for those interested:

"Real Options, A Practitioner's Guide" by Tom Copeland and Vladimir Antikarov - ppublished by Texere

I'll second that, pretty sure this book was my introduction to the concept as well.

 

[Aquarians]

Sig, thanks for the reference, I took a glimpse but can't figure out if it helps me at this point so I'm gonna look in more depth later.

For now I just applied to the EU funding thingie and already was scheduled and had to attend the first course on "entrepreneurship", the whole program takes three weeks.

What I can tell you is when I step into the class of around 30 people, I'm effectively doubling the average IQ floating around there