Obtaining Funding/Trading Capital

Quote from hmap1:

Thanks for the reply. We are running at the bare minimum with traders and programmers. We actually want to add to our staff with everything we have on our plate. So many good things, so little time with the staff on hand.
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That's what I mean by a difficult decision. You are facing the problem of limited resources and it sounds like you might be spread too thin. Patience is the key. I'm certain that if you give up some "cool" things for a while (e.g. development of new strategies) and focus on making one good idea work at a time, you will find a way to get that one good idea to fund the next, and the next... Having a business plan with a structure like this will also help you attract capital. It quickly shows that you are able to successfully plan for and manage your business.

jj
 
I agree. You are missing something here: System maintenance. We have 2 programmers. One is fluent in Windows, the other in Unix/Linux. Our main system houses both platforms and requires maintenance all the time, whether it be clearing, OATS or feeds or what have you. We need one of each on staff at all times. We cannot migrate down to one because right now, 2 is not enough just to keep things running as is. Each programmer alone has system projects piled up now. They are prioritized by speed to market and profitability. One problem we have now is that we have to drop some of the things we are doing in a particular day to tend to the main bread and butter system. That can make us loose focus. On the trading side, we have one trader who manages all the systems. Can't get any smaller than that. As it is, he (which is myself) manages a main system and 4 other ones all in real time. It can be done, but is also very stressful. My breaks at the moment come when one of the other programmers takes over, hence taking him from his work. The programmers have been trained to understand trading and can fill in when needed. Other than that, we have an office manager and I double as that as well, as do I do the books. Other owners do not take pay to cut costs, but work on a daily basis. Trust me, we have our expenses to a minimum and missing one of the current staff members would turn into an issue, as everyone is extremely important to maintain the company on a day to day basis. On the expense side, we have a moderate rent and misc expenses. We cut costs in every avenue possible. Everything is bare minimum. With this, we have all work 12 hour days non stop for so long and have churned out great ideas and systems. Now we need capital to grow.
 
Sounds like you've got things pretty well nailed down. Nice work!

Next step is to "hire" a salesperson to do fundraising. Industry standard is in the neighborhood of 20% of fees. A good place to start looking for those is http://village.albourne.com. If you know any brokers, most will be eager to find a good product to add to their inventory at the same price.

As you clearly don't have the time to do fundraising for yourself, you must be willing to give up some of the profits. If you really hate the idea of splitting the revenue like this, just use these arrangements until you can hire your own sales/marketing department. The thing is, these relationships are no-lose propositions. You don't have to worry about carrying employees, you can attract better talent to your team, and you don't have to pay anyone who does not perform.

jj
 
We are focusing on one idea at a time. We are spread thin, but the programmers are focused on one system design right now. It's pretty nice. They get pulled off for maintenance all the time and that's an issue. One problem with a main system that carries a company is that sometimes it performs a little less during the month than expected, hence not carrying all costs. At that point, you pull funds from other systems that was used for growth and you are back to square one. If we had more capital, we could use it to diversify and increase cash flow significantly. One system I have in mind that we call "VS" has an 80-90% profitability and an average profit factor of 5-7. Its nice, but doesn't match the return of our main system. So the main system gets the cash because thats where maximum return will be achieved. Does the other one sound bad? No, but we don't have the capital to make a dent with it. That one other system could be spread out to atleast 10 other markets and equities galore, but with what capital? It's just frustrating. I'm sorry for not addressing some of your questions. I have a tendency to skim over postings. :)
 
1) Get everyone in your small company to take out a personal loan.

2) Look up credit cards for low introductory rates and take cash advances from them and make sure you repay and cancel the cards after the intro rate is over.

3) Take all this borrowed money and put it in a brokerage that will leverage you 4:1. So you're double leveraging.

Since your system has very low drawdowns and high profitability, leverage should work in your favor. Leverage to the hilt. That's what George Soros did in his early days. This way, you keep 100% ownership of your intellectual property and don't have to split it with ignorant rich people who know nothing about trading.

Find creative ways to borrow money.
 
Thank you for your thoughts. I can't ask employees to do that. Too risky. And the amount of money we want for growth is a little higher than that of credit cards. No conventional establishment will loan us money based on our type of business.
 
It's funny, but we have had offers from "rich people who know nothing about trading" and we have declined. It's not arrogance on our part at all. We would do it if the relationship was right, but it wasn't. We had one scenario where we could have had our money(ALOT OF MONEY), but there was a HUGE price to pay for it which included doing what they wanted as they didn't know ANYTHING about trading or system development. They had me running around in circles proving things out I did 3 years ago and then proved they didn't work! It was very frustrating. It's not that we are not open to change or other opinions or directions, but if that is the case, let it be for the better of the company and all involved. In this case it wasn't AT ALL better for the company and we saw the writing on the wall and respectfully declined. This person had over 100 million and wanted something to do for a hobby, not for profit and at our expense and his leisure. We want someone or some entity that wants to make money as we do. That's where we are at.
 
Ok, Cutten and Trade_ya,

Rereading the stuff, it is true that he in fact did not state that his scalable system doubles each month. I took the whole thing like a joke.

You must be a nut to pay any attention to this kind of story. Doesn't the guy pretend to have a number of brokers running their system for them? Let's be serious. Such brokers should be very well informed about what these people can do and what they can't.

If they would really have a working scalable kind of money pump, financing would not very hard to come by. That's the impression I got from reading this story.

Trade_ya, you call me an idiot. Quickly go and bring these guys your money. You must be a sharp cookie.

nononsense
 
First off, I did not call you an idiot. I said that you are making yourself look like an idiot. Secondly, if you think that you can rely on your brokers to get you funding for your strategy, obviously, you don't know anything about raising capital. Third, rest assured that before I committed any capital, I would check things out up, down and sideways. Finally, I think it foolish to just dismiss things out of hand without investigating. Certainly you will never find anything of value unless you turn over lots of stones. I think the guy sounds credible and I believe the story. Whether or not I put money in, that all depends on what I find out after further investigation and the terms of the deal. I respect the guy for posting his situation here, this is a unique avenue to reach a very targeted audience for me. I don't see anything fishy about it thus far. Neal.
 
Quote from hmap1:

No conventional establishment will loan us money based on our type of business.
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Just curious. Have you applied for a business loan from the banks ?

:)
 
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