Lorenzo Thione Gaingels LGBTQ Startup investing financial funding investor gay entrepreneur OutBuro

Out Gay Entrepreneur, Venture Investor & Broadway Producer

Lorenzo Thione Gaingels LGBTQ entrpreneur out gay business venture capital investor OutBuro

In this episode host, Dennis Velco chats with Lorenzo Thione, Managing Director of Gaingles (https://www.gaingels.com), an LGTQ equality centric venture capital syndicate. Lorenzo is a serial out gay entrepreneur, venture capitalist, writer, Broadway producer, and LGBTQ non-profit founder. Born and raised in Italy, he moved to the United States to attend college in Texas focusing on computational linguistic artificial intelligence. He co-founded his first start-up business right out of college and its been the entrepreneur’s path ever since.

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Connect with Lorenzo on OutBüro at: https://www.outburo.com/profile/lorenzothione/

Lorenzo Thione Gaingels LGBTQ entrpreneur out gay business venture capital investor OutBuro
  • 01:45 Lorenzo Thione provides a brief introduction
  • 01:50 Introduction to StartOut
  • 03:30 Introduction to Gaingles, the largest LGBTQ focused venture capital syndicate
  • 05:50 The journey to entrepreneurism
  • 08:30 Entrepreneurism is not a passion. It is a disease.
  • 10:30 Surround yourself with a support network11:00 Having a co-founder(s) can balance and round out the experience
  • 11:30 Parinoid-optimist and projecting the reality you desire
  • 13:00 Perception is reality
  • 14:30 Failure is an experience of learning
  • 15:30 Mentors and Peers
  • 16:30 Ways to be involved with Gaingles
  • 17:00 Description of companies Gainles invests in today as a venture syndicate through venture lead rounds: (1) LGBTQ owned (founders), (2) LGBTQ leaders in C-suite, (3) LGBTQ equality value-aligned companies
  • 22:30 How social responsibility investing positively impact companies with an example of a negative impact with business reputation and customer trust lead to reduced financial performance
  • 23:45 Gaingels has grown from investing about $4-million 4 years ago to about $20-million in 2019 and just surpassed $50-million in investments in this year (2020) alone.
  • 24:00 Is there any chance companies are using Gaingels as window dressings like Pinkwashing investing?
  • 32:00 Early stages mean greater impact
  • 35:00 Lorenzo’s tip for LGBTQ startups

Thione is the Managing Producer of Sing Out, Louise! Productions, the co-founder and CEO of The Social Edge, and a Managing Director at Gaingels (https://www.gaingels.com), a venture investment group based in NYC focused on investing and supporting LGBT+ founded/led startups, and socially responsible companies focused on supporting LGBTQ equality. In addition to his work as an entrepreneur, technologist and venture investor, Lorenzo is the co-creator/co-book writer and the lead producer of Allegiance, the 2015 Broadway musical starring George Takei and Lea Salonga. In developing Allegiance, he developed and deployed social-media viral strategies that led to the astounding growth and unprecedented awareness and audience engagement for both George Takei and Allegiance’s social media platforms, and – in turn – to the founding of The Social Edge, a social media management and marketing firm based in NYC. His producing credits include The Inheritance, Slave Play, Hadestown (Tony Award), Cher Show, The New One, Catch Me If You Can (Tony Nomination), and American Idiot. Additional IMDB credits: George Takei’s Allegiance (Director, Executive Producer), Bandstand – The Boys Are Back (Director, Executive Producer), Allegiance To Broadway (Executive Producer).

Besides being an active investor in the LGBT+ startup ecosystem via his position in Gaingels, Lorenzo is a founding board member and Chair Emeritus of StartOut, a non-profit organization dedicated to fostering and developing entrepreneurship within the LGBT community. A native of Milan, Italy, Lorenzo holds an M.S. in Computer Engineering from the University of Texas at Austin and has co-authored several publications in Software Engineering and Computational Linguistics. He is an active investor, advisor, or board member, in over 80+ startups and a named inventor on over 30 pending and issued patents in the US and worldwide.

Join Lorenzo on OutBüro, the LGBTQ professional and entrepreneur online community network for gay, lesbian, bisexual, transgender, queer, allies and our employers who support LGBTQ welcoming workplace equality focused benefits, policies, and business practices. https://www.OutBuro.com

Would you like to be featured like this? Contact the host Dennis Velco. https://www.outburo.com/profile/dennisvelco/

Superbia Services Myles Myers LGBTQ Credit Union Gay Money Entrepreneur lgbt banking personal business (1)

Building Community: LGBTQ Financial Services – Superbia!

In this conversation with Superbia Services out gay entrepreneur CEO/founder Myles Meyers, we chat about the very long road to bringing his vision to serve the United States LGBTQ community through financial services and products that eliminate discrimination and biases. Further, through using those services, provide much-needed funding for a US-based LGBTQ community organization. With is 30 years of financial institution experience lense in early 2015 Myles sought out a US-based LGBTQ financial services organization and found there was none. Knowing the institutionalized discrimination that many traditional financial services organizations impose on the LGBTQ community and individual biases of staff of otherwise well-intentioned institutions, Myles saw the strong need for a new financial services organization that is focused on the needs of gay, lesbian, bisexual, transgender, interest, asexual, queer, questioning persons and our wonderful community supporting allies. He also understands that most nonprofits serving and supporting the LGBTQ community struggle to meet current operational expenses let alone have the financial option to grow. So, from the outset, Myles set his sights on creating a new financial service organization that supports the individual, small business owners, and community nonprofits.

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We’d love your text comments at the bottom of each show episode page asking questions of me, our guests, and interacting with other commenters.

We also have the feature where you may “call-in” and leave a recorded message. Your recorded message may be used in future episodes and requires a simple registration on the podcast platform

Superbia Services Myles Myers Credit Union Banking Financial LGBTQ community personal and business online banking

In this chat, you’ll get a great overview of the steps taken, progress, next steps, and immense personal commitment of Myles and his team. So far it has been a 4-year journey. It is with good reason a highly regulated industry and therefore Myles and his team been working tirelessly to meet and exceed all state and federal regulations to ensure Superbia Services is a safe and sound financial institution.

Watch or listen to the conversation to learn more. Connect with Myles on at: https://www.outburo.com/profile/myles/ Our first recorded interview with a great overview Episode page: https://www.outburo.com/superbia-1st-in-gay-banking-insurances-and-money-management/

On YouTube: https://youtu.be/DRRUAiqRkMQ Our first article on Superbia in December 2018: https://www.outburo.com/superbia-financial-the-first-lgbtq-community-national-credit-union/

Join Myles on OutBüro, the LGBTQ professional and entrepreneur online community network for gay, lesbian, bisexual, transgender, queer, allies and our employers who support LGBTQ welcoming workplace equality focused benefits, policies, and business practices. https://www.OutBuro.com

Would you like to be featured like this? Contact the host Dennis Velco. https://www.outburo.com/profile/dennisvelco/

Superbia Services Myles Myers LGBTQ Credit Union Gay Entrepreneur lgbt banking personal business (2)

Superbia! 1st in Gay Banking, Insurances and Money Management

Superbia Services, founded by out gay entrepreneur Myles Meyers, is an LGBTQ Credit Union and financial services firm. The credit union is owned and managed by it’s gay, lesbian, bisexual, transgender, intersexed, asexual, gender nonconforming, queer, and or great community allies who join. It provides all the traditional financial and banking services for personal and small businesses. The services side is working to provide life and health insurance as well as wealth management. Mr. Meyers has decades of financial services experience and founded Superbia based on the discrimination and biases many in the LGBTQ community face. Superbia, which is Latin meaning Pride, is designed to serve a community need as well as provide needed funding for LGBTQ community nonprofits. The more you use the services the more that, it can be provided to the community. It is a social impact business that creates an equal financial playing field where all members are treated with dignity and respect. As Mr. Meyers stated, “the world doesn’t need another bank or insurance company, but the world does need one that is focused on serving this community”. 13:50

Connect with Myles on at: https://www.outburo.com/profile/myles/

Superbia Services Myles Myers Credit Union Banking Financial LGBTQ community personal and business online banking

Our first article on Superbia in December 2018: https://www.outburo.com/superbia-fina…

Learn more about Superbia Services at: https://superbia.org/

  • 01:30 Myles provides a brief background overview which includes nearly 30 years in the financial services space
  • 02:20 In 2015 Myles investigated LGBTQ focused financial service offerings and found none. He realized the need and the idea was born.
  • 03:00 As a cooperative/credit union the members own and manage the organization. We can benefit the members and the community.
  • 04:00 The credit union obtained it’s charter Sept 9, 2019. They are working on the final operational approvals before that opens live.
  • 04:15 The credit union is the foundation yet Superbia is broadening to life insurance, health insurance, and wealth management. The need is there.
  • 05:00 A member may be voted onto the board
  • 05:30 Superbia will offer small business banking and services
  • 07:00 the national association was launched on July 1, 2020
  • 08:30 It is an online model with a partner network fork local cash withdraws and local cash deposits to reach our members where they live
  • 12:00 Have received international coverage and interest
  • 13:50 the world doesn’t need another bank or insurance company, but the world does need one that is focused on serving this community”

Join Myles on OutBüro, the LGBTQ professional and entrepreneur online community network for gay, lesbian, bisexual, transgender, queer, a.lies and our employers who support LGBTQ welcoming workplace equality focused benefits, policies, and business practices. https://www.OutBuro.com

Would you like to be featured like this? Contact the host Dennis Velco.

Catch Me If I Fall… Gay Life in the Third Age

Catch Me If I Fall… Gay Life in the Third Age

Fifteen years of marriage have brought us happiness and contentment in our personal lives. After both working in the gay scene for 30 years (and therefore having no prospect of getting a pension) we decided it was time to leave the urban gay scene, move to the countryside and start a new life, more suited to our needs as we grew older. We slowly built up a new circle of friends and neighbours and started a new business selling antiques, growing herbs and giving workshops.

www.hogelandshoeve.be

Then, after 20 years of building a small but steady farm business in Holland, our landlord suddenly wanted us out! We were confronted with the choice of either downsizing or taking on a new challenge. We chose the latter and decided to move to Belgium where we could hope to rebuild a bigger and better business and support our modest lifestyle. Although it meant giving up all our savings, we were determined to build a new life in which we could continue to work into ‘old age’, and confident that we were strong enough to succeed.

Our Dutch friends told us how ‘brave’ we were! Our gay friends told us how ‘lucky’ we were! Our new neighbors told us how happy they were to welcome us to Belgium. And we kept in touch with everyone with regular newsletters and updates to our website.

After we landed, the paperwork took most of a year to organize. We scratched our way through immigration, health insurance, car registration, residency permits, work permits, and myriad other forms until we eventually felt that we were beginning to settle. We opened our new farm-shop and found slots at local markets where we could start to sell our produce. We made friends with other local farmers. We started to grow our business again and get support from the local community.

But we had still overlooked the snakes in the grass. Our new business started to grow and we sold well in the summer months. Then we learned that the Belgian government wants not only the Sales Tax for the summer, but six months of Sales Tax in advance(!) and, with our savings already gone, we face a cash crisis. The income we can generate at this point will not pay for both the advance taxes and the investment we need in equipment and to build up our stock. Retailers and restaurants want to buy our products in the future, but we still have a big investment to find before we are ready to supply them.

We’ve decided to try crowd-funding now, hoping that our friends and community will possibly step in to save us from going over the cliff, but we have no idea whether it will work. Does a lifetime of being responsible citizens, good, caring friends, and generous in helping others really bring us any ‘social capital’? We’re biting the bullet now and will shortly know the answer.

Two-Gay-Men-Start-Organic-Farm-Sharing-their-Story-as-Entrepreneurs-Seeking-Investors-Capital-Funding

If we were straight folks then we would perhaps have a better chance. But our social circle has been decimated by HIV, leaving lots of them sick and living on benefits. Others have moved away  and are no longer as close as we would like. And since we are no longer shopping around for casual sex, we seem to have little direct contact with the majority of the LGBT community. Of course, there are many others in a similar situation; couples living in the country with a few cats, but we haven’t yet found a way to meet the older rural gay community with whom we can build a network.

The business keeps us both busy for 16 hours a day, up to our elbows in jam and manure, with little time to work on anything else. That’s not unexpected with a new business, but makes us feel isolated, fearful, and sometimes overwhelmed by events around us. It’s hard to stay focused when the whole project has become precarious.

We don’t regret our decisions, nor would we consider moving back to the city life as two older gay men with their youthful excesses long gone. However it’s still hard to see what ‘community’ we can develop beyond it.

We’d love to hear from others who recognise themselves in this story. Perhaps you can help us find the way forward or just want to offer us a web-hug? And finally, of course, perhaps YOU are in a position to help us with our crowd-funding campaign?  gf.me/u/v24yri

Hogelandshoeve BV
Sint Annastraat, 29
3730 Hoeselt
Belgium

How to Make Your [Gay] Money Work as Hard as You Do - LGBTQ Personal Finance Education Debt Reduction - OutBuro - bisexual queer lesbian transgender

How to Make Your [Gay] Money Work as Hard as You Do

Do you all too often have more month left over at the end of your money? Do you work hard for your paycheck only to watch it go out faster than it comes in? Do you ever wonder how you’ll put your children through school?

You’re not alone. The truth is that even though “gays are fabulous” (and we are), most of our community is struggling financially.

And we can relate.

Learn more about the Debt Free Guys’ LGBTQ Personal Financial Freedom course and resources.

Who are we?

We are John and David. After dating for 18 months, we came out of the closet to each other about our money, and it wasn’t pretty. We were $51,000 in credit card debt. Ouch! Sure, everything looked good on the outside. But we were hurting on the inside.

We were the gay cliché of being fabulous but fabulously broke. Ever feel this way?

You see, coming from times and places when it wasn’t okay to be gay, we were both bullied, picked and treated differently because we were – well – different. We grew up feeling like we weren’t as good as the other kids. Can you relate?

Then, when we found the courage to come out of the closet and moved away from our families to find other people like us, we were so insecure and wanted so desperately to fit in with the other gays, that we thought we needed all the right things – clothes, home, travel, careers, partners, stuff – all the right outward appearances – so we wouldn’t be bothered by another community. Our community. Sound familiar?

We paid off that credit card debt in less than three years! It took a lot of soul-searching, and we attribute that success to figuring out what was most important to us. Sixteen years later, today, we’re helping other queer people achieve the same financial security.

Are you living fabulously broke - Learn to be debt free with the DebtFreeGuy

Is queer money different than straight money?

If you thought you (and now us) were alone in this struggle, did you know that:

  • same-sex couples with at least one child under the age of 18 have 20% more credit card debt than their straight peers and have almost 90% more student loan debt?
  • queer college graduates have 16% more student loan debt than non-queer graduates?
  • 57% of our community says their current financial condition harms their mental health?

So, no, you’re not alone. Yes, our community has systematic and personal struggles with money. Yes, there’s something we can do about it but knowing there’s a problem isn’t enough.

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LGBT Business Owner How Much Should You Pay Yourself?

You are an LGBT Entrepreneur and started your own business to do something you love and make money.

You rock.

      You are AWESOME.

                Likely little nuts like most risk-taking entrepreneurs, but we LOVE YA. 

But how much should you pay yourself? Too little and you may struggle to survive. Too much and your business might be at risk. So how do you strike the right balance?

Take the guesswork out of your salary

For many, the chance to set your own salary sounds like a dream come true. But small business owners know the reality is a little more complicated.

You should only pay yourself out of your profits – not your revenue. When you see money coming into your business, don’t assume you can pay yourself a big slice of that. Before you take your cut, you also need to take account of things like taxes, payroll, fixed costs and overheads.

Good accounting software will really help you work out how much you can afford to pay yourself. It will let you keep track of all expenses and calculate profit rather than revenue or turnover. It will also help identify areas you can make tax deductions.

Setting your own salary will depend on your location, your industry, your profits, and how much you want to earn. But there are a few things to think about that can help you land on a reasonable figure.

Don’t undervalue yourself

If your business is still in its startup phase, you might not turn a profit during your first year. Of course, this doesn’t mean you shouldn’t pay yourself.

There’s no point in being a complete miser with your company’s money if it causes you financial and emotional problems. Personal money issues are a big cause of stress, and if you’re stressed then you won’t make good business decisions.

Undervaluing your time and the work you’re doing can harm your productivity and your business, so you should pay yourself enough to live comfortably without worrying. Take out what you need to avoid causing problems for your business and your personal life.

Add yourself to the payroll and pay yourself regularly

Don’t just dip into your business funds as and when you need to. Set up payments for you and your employees (it may be weekly or monthly) in your payroll software, and stick to them.

Build that into your business plan right from the start, perhaps with a rising salary as your business grows. That way you’ll get used to the amount of money you receive and won’t have to worry about taking out occasional large lump sums.

This will also look better to your employees. Regular small payments will be more acceptable to them than random large lump-sum withdrawals from the business. They will also look more acceptable to the government, too. If you take out big sums of money at irregular times, it may raise eyebrows at the tax office or lead to an audit of your company.

Take out ‘reasonable compensation’

Depending on where you live in the world, ‘reasonable compensation’ or a similar term may apply to you. This is known as the amount of money that the government expects you to take from your business. It depends on the size of the business, the market sector, and the level of turnover and profit.

Here are some pointers for what’s a ‘reasonable’ amount:

  • How much would a similar business pay for the work you do in your role?
  • What do recruitment ads and agencies offer to pay for someone in your position?
  • Are your wages equal to your duties and are those duties being performed?
  • Do your wages seem reasonable when you take into account your level of responsibility and the amount of business you handle?
  • Is your pay directly related to the amount of time you spend working?
  • Does your pay seem reasonable when compared with your employees’ wages?

You can also talk to founders of other, similar businesses and try to find out roughly what they pay themselves. This is a good way to start networking, though you might have to be tactful about it. And take a look at your government’s tax websites for further guidelines.

Consider the legal structure of your business

How much you can pay yourself, and when, might be restricted by the legal structure of the business you run.

For example, if you’re a sole proprietor you’re usually free to pay yourself whatever and whenever you like. That’s partly because you’re not accountable to shareholders or stockholders.

But other types of business, like incorporated businesses, usually have the business owner on the payroll. They would receive wages on a regular basis, just like any other employee.

However, the rules do vary from country to country, so check with your accountant before you decide anything. Be sure to record all transactions in your accounting software so you have an audit trail too. Do this just in case the tax office decides to investigate your payments to yourself.

Be tax-efficient: Five pointers

Now you’ve decided how much is a fair salary for you, what’s the best way to withdraw that money from your business while remaining as tax efficient as possible?

There’s no one-size-fits-all approach because tax laws vary from one jurisdiction to another. Tax rates and allowances will also vary depending on how your business is legally structured. Here are some ideas to consider:

  1. Take a straight salary
    It’s simple, easy to manage and account for, and is unlikely to raise any eyebrows. It’s not always the most tax-efficient option, though.
  2. Balance salary with dividend payments
    If, as the business owner, you also own stock or shares in your company, you could take a minimal salary and then pay the remainder out of dividend payments. This can be more tax-efficient (since dividends are usually taxed less than the salary). Make sure you check the legality with your tax office first.
  3. Take payment in stock or stock options
    This can be a useful way of paying yourself in a tax-efficient manner.
  4. Take a combination of salary plus annual bonus
    This arrangement isn’t just the preserve of the banking industry and it can be tax efficient in certain circumstances.
  5. Create a business agreement to pay yourself later
    If you’re not desperate for money right now, you could create a written business agreement to pay yourself later, deferring payment to yourself. But this becomes a liability for the company and would need to be accounted for.

Don’t forget deductions, expenses, and benefits

Leaving aside wages, there are some great financial benefits to running your own business. Medical insurance and 401(k) contributions are just two types of benefits to consider. They can make a big difference to your personal financial situation and they’re legitimate business benefits.

Here are some examples of expenses that can be offset against the tax your company pays:

  • Car expenses (business mileage of your car)
  • Mortgage interest payments (if you work from your home)
  • Capital equipment expenditure (such as new computers).

You’re not usually allowed to claim expenses in the “personal, living or family expense” category. But you can claim for the business use portion of an item. This might mean you get to drive a new car in your personal life at a reduced overall cost. When in doubt, check with your accountant to find out what will work for you.

Invest money for growth

The money you take out of the company (that doesn’t relate to your business) is money that can’t be used for investment and business growth. You’re likely to be taxed on money you take out, so the real value of the money you keep in the company is even greater. That’s because it will be untaxed or offset against tax, depending on how it’s used.

If you think your business is going to grow in the future, it makes sense to use some of your profits to help fund that growth. The more money you invest sensibly into your business, the more likely it is that your company will grow. And that means you should be able to pay yourself more at a later date.

When not to pay yourself

If your business is going through a tough time financially, it’s usually not a good idea to take any money out of your business for personal use.

You should avoid taking any money if your employees haven’t been paid. It looks bad, and would seriously affect their morale if you did.

When you owe a lot of money it’s also wise to refrain from paying yourself a large amount. Creditors are unlikely to be impressed if you’re still taking home a large pay packet while their invoices or loans remain unpaid.

Pay yourself what you deserve

Ultimately the amount you pay yourself will depend on the success of your business. The more money your business brings in, the higher the salary you could reasonably be expected to draw from it.

It makes sense not to get carried away and pay yourself too much, for reasons described. But if your company is profitable, there’s no reason why you shouldn’t reward yourself for that success.

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How to Raise Money for Your LGBT Owned Business: Part II

So you’ve prepared yourself for the task of raising money in Part I of this guide – but now what? You’ll need to look at all the options to see which one suits your small business. So what are the best, most realistic ways to get funding?

Eight ways to raise funds

The traditional ways to raise money were through personal savings, bank loans, or retirement funds. But now there’s a much wider range of possible finance sources for your new business. So which type of funding is right for you?

1 Personal saving or retirement funds

If you have some savings you could use them to finance your business. The advantage here is you shouldn’t have to pay interest on the money and you won’t have an obligation to anyone else.

Using retirement funds is another option. It may be possible for you to draw down funds from your 401(k) to put into your business.

Regulations vary between countries, so you’ll need to consult a financial adviser to see what’s permitted. Be sure to check the tax implications of using personal savings or retirement funds for business purposes.

2 Bank loans and credit

Banks can be useful sources of funding, but the loans or credit they provide will usually have to be secured. That means you’ll have to offer something of value as collateral. This could be your house, or your company’s inventory or accounts receivable ledger.

If you fail to repay the loan, the bank may then take your collateral. That could mean you have to sell your house or stock or lose your income. So it’s not a transaction to enter into lightly.

Banks can offer the following funding services to help your company grow:

  • Loans
    These provide a specific amount of credit to purchase assets or meet financing needs. The loan is repaid based on a predetermined schedule or through monthly principal and interest payments. Interest rates are usually fixed for the life of the loan.
  • Lines of credit or business overdrafts
    These tend to be used for periodic financing. You can borrow up to your credit limit whenever needed.
  • Equipment financing
    Buying equipment can be a good option if you expect it to have a long, useful life. You may also benefit from financial advantages such as depreciation and tax deductions.
  • Real estate loans (mortgages)
    These are loans for purchasing land or commercial property.
  • Vehicle financing
    This is usually for buying or leasing commercial vehicles such as trucks or company cars.

The authority to lend to businesses has become centralized in some countries. This leaves branch bank managers with less power than they had in the past. But you’re still more likely to be given a loan if you have an existing account with the bank since they can easily check your past financial record.

3 Credit card loans

Loans from credit card companies are usually unsecured, which means you won’t lose your house if you fail to repay the loan (though you could still be declared bankrupt).

However, the lack of collateral is reflected in the price. Credit card loans can have a higher interest rate than other types of loans ­which are often much higher.

Ask yourself if your business can afford the interest rate being charged. If your company’s profit margin is forecast to be 10% and the credit card interest rate is 15%, the numbers might not add up.

4 Government grants and small business loans

Many governments offer grants and loans to small businesses, either directly or through publicly­ funded organizations such as small business associations.

The available funds and the terminology will vary depending on the country you’re in. Small business loans, micro­loans, and research grants are often available for different types of business.

Your first step should be to contact small business organizations near you since they will help administer government loans and grants. Talk to them and find out what financial assistance is available.

5 Venture capitalists and angel investors

Venture capitalist (VC) organizations became more prominent during the late 1990s dotcom boom, and the technology field is still one of their preferred areas of operation. VCs tend to favor high ­risk and high­ reward companies that have significant growth potential.

It’s a gamble for them, but the pay­offs can be significant. They usually demand significant equity in the company in return for funding, so be prepared to hand over a large percentage of ownership if you go down the VC route.

Angel investors are similar to VCs but they tend to work with companies that are at an earlier stage of development. The money comes from wealthy individuals, usually in exchange for convertible debt or ownership. A recent trend is for angel investors to participate in groups, working together on research, investment capital, and advice.

Venture capitalists and angel investors will want you to answer the following questions in detail:

  • How many customers do you have today and how do you plan to grow?
  • When and how will your business be profitable?
  • Who are the leaders in the company and what is their experience?

Don’t be surprised if any funding deal includes side­lining you as executive manager or director. The VC or angel investor may not think you have the skills and experience to grow the company and repay their investment. If this is the case, they could want to replace you with someone who does.

6 Crowdfunding

Crowdfunding means getting finance from a large pool of backers. Instead of asking just one or two people for money, you can ask thousands or even millions. People pledge money in return for perks and rewards when your project goes ahead, and usually, this is done online. Crucially, crowdfunding sites use an all­-or-nothing funding model – either the funding goal is reached, or the project gets nothing.

Before you look at this as an option, make sure you get expert legal advice about your country’s jurisdiction on crowdfunding.

If you are able to use crowdfunding, it offers an alternative to conventional funding, with less stringent credit checks, better-­informed investors, and often no need for collateral. And the funding process is often faster than it would be from a bank. This is a great option for some companies that will have struggled through the recession and have poor credit ratings as a result or others that are new and so have no credit record at all.

Crowdfunding can also provide useful feedback on your business plan. If you reach your funding goal, it’s a good indication that your plan has a realistic chance of success. If you don’t, you might need to rethink your plan.

Two of the most well­ known crowdfunding sites are Kickstarter and Indiegogo. The former is US ­focused while the latter is smaller but with more international support. If you want to use either of these crowdfunding sites, you’ll need to check that they’re available from your country.

For more about crowdfunding, here’s a list of 30 people you might want to follow.

7 Peer-­to-peer lenders

Similar to crowdfunding sites, peer­-to-peer­ (P2P) lenders match borrowers and lenders directly. This is usually done via online auctions and without going through a traditional financial institution like a bank.

The rates can therefore be more favorable to both sides. Borrowers tend to pay less than bank lending rates, while lenders get a higher (though more risky) return on their savings.

While crowdfunding provides finance for new businesses or specific projects, peer­-to-peer­ lending can be used for more general purposes.

It works a lot like eBay. You post the amount you need on a peer­-to-peer­ lending site, along with the maximum interest rate you’re willing to pay. Lenders can then choose how much to lend to you, and at what rate. Examples include Prosper in the US and Zopa in the UK.

Again, like crowdfunding, the jurisdiction in your country may prevent you from using P2P lending, so make sure you get legal advice before proceeding.

8 Friends and family

It can be tempting for you to borrow money from friends and family, but it can also go badly wrong. There’s a simple psychological reason for that. Relationships are based on emotions, while business is (or should be) based on rational decisions. The two rarely mix well.

If you have a strong relationship with the friend or family member from whom you plan to borrow from, this can be a low ­cost source of finance for your business. But it can create an emotional liability as well as a financial one. This is the case particularly if you borrow from people who don’t have much business experience.

If you do decide to borrow from friends or family, have a clearly ­written legal document explaining your agreement. That way, if there are any problems later on, at least you’ll both have something in writing to refer to.

Adapt to the current financial climate

Banks are cautious about lending to small businesses at the moment. One reason for this is because they’re rebuilding the capital they lost during the financial crisis. In addition to this, many of them don’t understand the business models of some newer companies. They also tend to be more focused on real­ estate lending, because the collateral is tangible and fixed.

But low-interest rates around the world mean that many cash-­rich organizations and individuals are chasing yield. If you can present a compelling business plan, you stand a good chance of getting funding from less conventional sources.

Do your research to get the best option

Crowdfunding, peer­-to-peer lending, government grants and loans, venture capitalists, angel investors, and more offer plenty of possibilities. In fact, the funding landscape is changing all the time. For example, companies such as Kabbage offer working capital advances based on real­-time business metrics.

Do your homework and use good quality accounting software to test out different financial scenarios, to see what funding your business really needs. Then compare the risks and benefits of the choice. Steer clear of disreputable lenders and make sure you understand the implications for your business. When you take your time and investigate all the funding options thoroughly, you’ll find one that’s right for your business.

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How to Raise Money for Your LGBT Owned Business: Part I

Starting a new business can be expensive, so it makes sense to seriously consider investment options right from the beginning. However, first you’ll need to be well prepared for the obligation that comes with getting funding, the questions to ask, and the small print to consider. So how can you prepare for this?

Challenges faced by small businesses starting out

Some businesses can be launched without much capital. For example, if you’re planning to provide remote services while working as a sole proprietor, you may need nothing more than a laptop and an internet connection.

But other types of businesses need money to get started. If you intend to launch a business that needs significant capital expenditure (such as a retail or manufacturing business or a company that employs several other people), you won’t get far without initial funding.

Seven questions to be ready to answer

Whoever lends you money will want to know you’re serious about investing it to grow your business. They will also want to know that you’ll be able to pay back the loan principal and the interest.

Make sure you have the answers to these important questions at your fingertips when talking to a potential investor:

  1. How much money do you want to raise?
  2. Will you be able to provide any collateral? What are your assets?
  3. Are you looking for debt, equity or other financing?
  4. How is your business credit rating? You can check this yourself in many countries.
  5. How is your personal credit rating? This too ­– and yes, the banks will check.
  6. How long have you been in business?
  7. What is your revenue?

Use professional accounting software to prepare charts and forecasts of your costs and revenue. This will help convince lenders that you have a solid business plan in place.

Always read the fine print

The terms and conditions of most loan agreements include the option for the lender to call in the loan at any time. That means the lender can ask for all their money back, with little or no notice, and regardless of whether you’ve been paying on time up to that point.

This doesn’t happen often, but when it does it can be devastating. Unfortunately it happens most often during recessions, when banks and other lenders become more nervous about the likelihood their loans won’t be repaid.

This is just one reason why you should read the fine print of any loan agreement carefully. Get legal advice if necessary, and work with your accountant or financial planner to determine how much you can safely borrow. Make sure you understand all the terms of the loan before you sign.

Understand the cost of investment

When raising money for your business, you’re unlikely to get something for nothing. Your investors will want something from you in return for risking their funds:

  • For bank or credit card loans
    The cost to you is the interest rate and the risk of losing any collateral you’ve put up.
  • For angel investors and venture capitalists
    The cost is usually a percentage of ownership or control of your company.
  • For crowdsourced funds
    It’s whatever you’ve pledged to deliver in exchange for the money raised.
  • For friends and family
    It could be any of the above plus the risk of ruining a good relationship if things go wrong.

In other words, getting funding creates an obligation. It means you have a responsibility to make the most of the money you’ve been given.

That might seem like a challenge, but on the plus side it can help you to focus on your business and concentrate on making it a success.

Once you have the money, make it work for you. Use good quality accounting software to keep track of the amount you’ve borrowed, what you use it for and how much you pay back over time. Read Part II of this guide for eight ways you can raise funds for your small business.

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LGBT Small Business – 5 Rules for Managing Cashflow

Cashflow management is vital for a growing business.

A cash reserve provides the cushion you need to manage unexpected events. It also gives you the confidence and finances you need to grow your business.

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Get your invoicing right

Once you’ve delivered a product or service, don’t wait to invoice. That can hurt your cash flow and your business. You should get into the habit of sending invoices for payment quickly.

Consider sending invoices immediately, or on a daily basis, depending on the nature of your work. If you are providing a service, think about asking for a deposit upfront, or a payment part-way through. It’s a reasonable request.

A product or service that has been delivered is the closest thing your business has to cold, hard cash. The sooner you invoice your client, the sooner you’ll receive payment.

 

Five rules for managing your cash flow

Invoicing is only the start. To maintain healthy cash flow, you need more than just strong revenue. You need to be able to collect that revenue too. Here are five rules for managing your cash flow and getting your invoices paid faster:

  1. Keep your books accurate and up to date
    Your cash flow is only as good as your accounting and reporting. Don’t let this get out of hand. Make sure your accounting information is updated regularly. Then you can see the financial state of your business at a glance.
  2. Don’t be too lenient with your customers
    Be direct and fair without being a pushover. A clever but polite invoicing strategy will usually get you a long way. But don’t be afraid to take more formal action if you need to.Keep a close watch on your accounts receivable turnover at all times. If it’s trending up, it might be time to step up your efforts at chasing payment. As receivables age, their quality goes down, so you should act sooner rather than later.
  3. Keep your accounting simple
    If you’re not confident with numbers, hire a professional accountant. Use quality accounting software, so you always know your cash position. It will also help you forecast your cash flow for planning purposes.For example, maybe you’re expecting a big order next month. How will you know if you’ll have the working capital needed to expand payroll? Or be able to buy the necessary inventory? Many small business owners get caught out when a large opportunity turns up. They are unable to take advantage of it due to a lack of cash. Don’t let that happen to your business.What’s more, a reliable accounting system will help you track and report on key business metrics. These include accounts receivables aging, operating margins and inventory turnover. Having a good handle on these business metrics will help you manage your cash like a pro – and take advantage of new opportunities.
  4. Keep your business and your personal finances separate
    This is essential if you want to understand your business cash flow and forecast how it might change. Mixing your business and personal finances can leave you uncertain about business performance.So keep them separate. That way you’ll know how much cash your company is generating. Then you’ll be in a good position to properly pay yourself – and use excess cash to strengthen and grow your business.
  5. Build a cash reserve
    Access to cash will make or break your business. The ultimate step to managing cash flow like a pro is to build a cash reserve. A cash reserve provides the cushion you need to manage unexpected events. It also gives you the confidence and finances you need to grow your business.It’s not always possible to build a large cash reserve. But if you do, it can insulate you from the economic cycle and the whims of banks and other lenders. It will also let you take advantage of opportunities when they present themselves.For example, you may have the opportunity to pick up inventory at a deep discount, or take on a large order or new client. With a cash reserve, you can quickly take advantage of such events.Building a cash reserve puts you in a position of strength. It might mean paying yourself a little less in the short term, but in the long term it will put your business on the path to success. That ultimately means more money in your pocket.

Make cash flow work for you

“Cash is king” might be a trite expression, but it really is vital for small businesses. Following the five rules above will help ensure that cash serves you – rather than the other way around.

 

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