Well Charles, if you really think about it, would you lend money without knowing all of the details? Not likely. The best lenders or venture types can often help you with you business growth as well. They are your team not adversaries. Also, you must undestand that the due diligence that they must do is to help determine any past activitivities that they could be held responsible for.
You can. Depending on the amount you were looking for, we have unsecured funding with no tax, banking, or income documentation required.
I don't believe you can, Charles. Usually the way we deal with the confidentiality issue is by using a nondisclosure agreement.
Charles - I believe anything is possible - but you may have put a fold in my theory. Don't want to present financial info? Go to family / friends and get money. It is unlikely they will ask you for your history. Look into your business to see if there are assets that you can leverage OR recalibrate your business for a few months to save cash flow (e.g. minimize staff, etc.). Otherwise, you have a wise team of advisors before me in this string, they are very right. Pony up the P&L.
Well, let's see, you want "me" to give you money to run your business based on you're unaudited presentation of the details of how things are going. Hmmm, you better be able to put on a darn good dog and pony show.
You need to put yourself in the lenders place. If it was your money that you were lending would you provide it without proper and verifyable information. Lenders want to see PFS, tax returns and details of the collateral, Your only other option is to mortgage a RE property or other bankable collateral.
It is a difficult situation. Given the current economy and the tightness of funding, my experience is that investors and lenders want more and more information and more and more details. One approach that could work is to give a current year's financial data and then some strong projections and description. I would get a non-disclosure agreement in place as well to protect yourself. Again, some investors do not like signing NDA's, but good protection.
You really do not have much choice if you want to get funding (investors will need that information) but to give yourself a bit of protection you can always ask the potential investor to sign an NDA before they get access to that information. I understand your concern but assuming you are dealing with reputable investors you should be fine.
I got funding a few years ago but had to disclose everything. Difficult to get serious investments without opening the books...
There are various levels of disclosure which would be required depending on the stage of discussion ....
At the initial stage you'll have to disclose the broad framework of your business, your business differentiators and value proposition and certainly your last audited financials in summary form.
If that arouses interest, you may be able to insist on an NDA under which you would make further disclosures.
After that, once you've negotiated a Term Sheet which is signed-off, there would be a Due Diligence - where there is nothing you can hold back ...
Hope this helps ....
In talking with several VC's and angel investors they expect for you to present and not necessarily give away the secret sauce until the next phase in the conversation. Most VC's and Angels will not sign an NDA during the pitch. If they do however move into due diligence mode it is likely that there would be some sort of LOI that will contain confidentially provisions that will protect you from unauthorized disclosures. I understand not wanting to give access to tax files and business history but those pieces are relevant for due diligence purposes. If someone is going to provide funding they are going to want to see all the records.
Disclaimer: I am an attorney but this does not constitute legal advice.
Most reputable lenders will require verification of your financial situation in order to fund a project. Therefore, they will require tax and other information. If this is something you do not want to provide, factoring based on receivables may be the best choice for you. If you can prove the outstanding receivables, the historical data usually is not relevant or needed by the funding source.
You can't. In my experience, no good investor will invest in you without it. Moreover, a good investor is not going to give the you money and walk away. They may want a board seat, to review your financials from time to time, etc.
If this concerns you, do not take third party investment.
You can't expect that from any reasonable investor. Would you fund someone's idea if they were only willing to tell you part of the story, and leave out the rest? It would make you wonder what they have to hide.
Your concern is understandable, but you have to remember, the investor has a responsibility to do his/her homework. You don't want an investor that isn't going to be a useful partner in the long run, anyway, so it's really better for everyone. And you probably don't have too much to worry about; their reputation would suffer if they became known for sharing private details of someone's business.
Best of luck to you!
A full disclosure would be required during the due-diligence process. I always look at the investor, and see his/her investment portfolio and profile. Their personal profile, references and network connections will give you a good idea as to how reputable the person is.
To get them interested you can always show them your high-level margins. If they have industry experience and you happen to be better than the norm, they'd be more than interested in what you got.
With regards to NDAs; many reputable investors don't like to sign them. That is because NDAs tend to limit the them from looking around for other opportunities to invest in. So, I'd look for references to see how reputable the investor is.
You can't, but an air tight non-disclosure agreement will go a long way to helping make you feel more confident in sharing your information.
Pretty much impossible unless you already have the capital and assets available to pledge. Today is a lender's market and there is opportunity to borrow; however, to start off not wanting to provide financial detail ultimately necessary in due diligence will make most lenders not interested. If of great concern request the lender to sign a confidentiality statement.