I’ve been having very good success with my site, FantasticForeskin.com, since launching in May. The affiliate support has been great and the sign-ups have been steady.
Now I want to take the site to a new level. I plan on doing some new upgrades and I want to do more shoots with really great models, including some European ones. (The site is about foreskin, after all!)
Now I’m looking for some cash to invest into the site. I’m about to put some ads in gay publications to find an investor or two.
Here’s my question for you: Have you ever worked with an investor before? Did you learn anything you’d like to pass on? Any advice on where to best find investors?
My plan is to sell 25% of my website (including blog, DVDs, domain, content, etc.). I’m hoping to find someone who is interested in gay porn as well as making money, and inviting them to shoots and having them work in an advisary capacity. I really need to find the right investor/s since this will be an ongoing relationship.
Re: Investors - anyone have any experience with them?
Any investor would want to see numbers first, in my experience. If you can show a positive IRR it should not be too difficult to get people interested. Numbers talk more than any fancy story.
Re: Investors - anyone have any experience with them?
I don’t have any experiences with investors (at least not in this biz), but I think you should be looking for investors within the adult industry. I have heard that banks think that investment in porn is too riskful (they should have been investing in porn rather than in some countries but ok) and private investors probably don’t have enough knowledge of the industry.
I agree with asiaboy that investors would like to see numbers - but I can imagine you’re not putting that info on a website.
Re: Investors - anyone have any experience with them?
$40k for 25% of the company, thus the company must be worth $160k. That would be the first hurdle. Roughly speaking, the companys’ worth in todays internet business would be calculated at 6 months turnover OR 12 months profit x 1.3. So your last six months turnover should have been $160k ($26,667/m) or your last 12 months profit should have been $123k ($10,250/m).
This is a fairly basic calculation, certainly very flexible. But not taking into consideration ludicrous sales such as MS buying Skype et al, the above calculation is a starting point. Major factors influencing a companys’ worth include growth. If for example a company is growing at 30% a month, and has already been going for a year or more, with sustained high growth, then the companys’ worth can be much greater. Basically the calculation can be based on the forecast next 6 months turnover or forecast next 12 months profit.
Thereafter, you can calculate assets into the equation such as domain names, web-design, programs, etc. or in the case of MS-Skype, their customer list.
Re: Investors - anyone have any experience with them?
Couldn’t you ask money to your bank? I have a small company (< 5 mln / year turnover) with very good credit rank and my bank offered me a 250,000 euros load. I didn’t take it because I didn’t need money and I didn’t want debts.
Re: Investors - anyone have any experience with them?
Thanks for all the good ideas and thoughts, everyone. I really appreciate it.
Banks are pretty tough right now. I’d actually welcome having an investor, someone to run ideas by and brainstorm with.
I’ll keep you posted as to how things work out.
Re: Investors - anyone have any experience with them?
I was researching this very same question a few weeks ago because I was thinking about starting a pay site but wanted to find some investors to help with the start-up costs. To pay models, design the site, advertise and do all the other tasks associated with starting a quality gay porn site will probably cost up around $50K and I wanted to find someone to share those costs in exchange for a share of the profits. I searched adult forums like GFY and Netpond and didn’t find much useful information. But I can offer a few comments from what I have learned.
First, if all you need is $40K are you not able to just get the cash through your credit cards? I checked recently and I have like $100K worth of credit on my charge cards… very tempting if I ever wanted to take that trip around the world I’ve been dreaming about! If you have more than 5 or so cards you probably have that $40K and more. Of course, if you’re like me you may not want to touch your credit cards because you only have 30 days before the obscene interest rates kick in (that’s why I haven’t done this option… yet). Or maybe you really want a local partner as you mentioned.
Second, I’d be careful about how you advertise for this. My understanding is that there are strict federal and state laws about advertising investment opportunities. Tracking down the laws can be a challenge though. Apparently it all has to do with how you word your offer… investment vs loan vs partner, etc. Some ways of wording this are OK and others are a big no-no. I’m still not sure which are which. Also, I didn’t see a 2257 statement on your site so maybe you’re not in the USA and these laws may not be an issue? If you have a lawyer you should bring him in on this now (maybe he even knows some investors!).
Third, I think you have an excellent chance of finding someone by advertising in gay bar mags. Depending on your location you may have good luck finding someone who is into porn and has cash to spare. My theory is this: we all know there are “whales” out there who spend hundreds, sometimes thousands of dollars on cam sites. So logically you’d think some of these whales would jump at the chance to actually own part of a porn company. I could be wrong, but you never know unless you ask!
Hope this helps and please keep us posted on your results!
Re: Investors - anyone have any experience with them?
You are probably right on the money when you say that to do a new site “right” about $40k-$60k is needed.
The one main problem getting “just” an investor is that they are going to want a ROI that a porn site is just not going to give them in the time frame that they want. Now, if that company teams up with someone that has a network already in place to handle another site then there is synergy between the two companies that is worth more than the initial $40k investment.
Re: Investors - anyone have any experience with them?
Thanks for the detailed thoughts, MSM. Much appreciated!
Credit cards are pretty exhausted from starting up the site and living expenses. Not a bad idea, but kinda tapped out there.
Good thoughts on the legalities of investing. As I understand, it’s most strict if the entity seeking the money is a corporation. For a deal structured as a limited partnership, it’s quite a bit easier. But a lawyer is never a bad idea. Good thought.
Yeah, I’m looking for one of those “whales.” I have fun making porn and working on the site. Part of what I’m offering is access to that process and world. That’s why I’d like to find someone local. I’d like to be able to meet with my potential investors first to make sure it’s a good match. I’d also like to invite them to shoots from time to time as well.
I’m looking forward to being able to build the site further and make some killer porn!
Re: Investors - anyone have any experience with them?
I don’t know about credit card rates in your Country but here is way cheaper to ask for a loan to a bank than to debt using credit cards (expecially for that amount of money).
Re: Investors - anyone have any experience with them?
I wanted to go out on a limb and suggest something that people might disagree with (and please feel free to do so!). I propose that the kind of investor who would consider funding a porn site is not the typical investor who is hung up on ROI and things like that. I think that a porn investor might be more likely to let their dick do some of the decision making for them. If they believe they will have a good chance at meeting and interacting with hot porn stars a gay porn investor might be less worried about making a huge profit or even getting back their investment. I don’t think someone who might invest in gay porn acts the same as they would if they were buying Walmart or Pepsi stock.
Now some of you might say that any gay gentleman who has reached the point in life where they have the means to invest probably didn’t get there by making rash, emotional decisions. I say true, but then again there are some rich men who got their money not through their own shrewd investments, but perhaps from an inheritance or company buyout.
In any case, I say dangle a Tommy Defendi or Samuel O’toole in front of a rich gay guy looking for an investment and maybe you’ll find that a rock solid cock is more important than a rock solid business plan.
Re: Investors - anyone have any experience with them?
I’ve been staying out of this thread for a while. Partnerships sound great on paper, but you need to talk and think about what happens if a partner isn’t doing their job? What about differing opinions, how do they get resolved? Does the investor have any say in how the site is run, if so what if they want it redesigned in blazing pink with pop-ups?
Over the years I’ve worked in a number of co-operations and they rarely seem to work out. But I think the most important thing you do, if you’re going to get someone else involved in your site, is to draw up a document that details upfront what is going to happen if the partnership needs to be dissolved. People don’t want to talk about these things ending or going sour, but you really need to have that hammered out up front, otherwise you’ll be getting yourself into a mess down the road.
To be honest with, and I don’t know if they’re looking, but I’d talk to Roger at My Gay Cash. They’re a great outfit, they run a number of sites, they’ve been around for a while, and they’re respectable people.
The problem with Fantastic Foreskin is that it’s a niche site, so I’m not sure it’s ever going to grow into a huge site with thousands of members, and maybe that makes such a partnership prohibitive. Your site can certainly provide you with a good living, can it provide two people with the same? I don’t know.
Re: Investors - anyone have any experience with them?
[QUOTE=msm;103216]I wanted to go out on a limb and suggest something that people might disagree with (and please feel free to do so!). I propose that the kind of investor who would consider funding a porn site is not the typical investor who is hung up on ROI and things like that. I think that a porn investor might be more likely to let their dick do some of the decision making for them. If they believe they will have a good chance at meeting and interacting with hot porn stars a gay porn investor might be less worried about making a huge profit or even getting back their investment. I don’t think someone who might invest in gay porn acts the same as they would if they were buying Walmart or Pepsi stock.
Now some of you might say that any gay gentleman who has reached the point in life where they have the means to invest probably didn’t get there by making rash, emotional decisions. I say true, but then again there are some rich men who got their money not through their own shrewd investments, but perhaps from an inheritance or company buyout.
In any case, I say dangle a Tommy Defendi or Samuel O’toole in front of a rich gay guy looking for an investment and maybe you’ll find that a rock solid cock is more important than a rock solid business plan.
:)[/QUOTE]
Is that the type of investor that you would really want though?
Re: Investors - anyone have any experience with them?
My two penneth would not be related directed to this industry as i’m still a rank amateur. However I have allot of experience in other industries and one thing that i always remember is a quote from a very wise man. “A partnership is a ship that shouldn’t sail”
In my experience unless you find that golden wallet that will allow you to have your head and trusts you to run the show there is a huge risk of interference that can water down your idea.
As Dzinerbear says your site is a niche and it will have limits. However I have the utmost respect for what you have achieved and think that in some circumstances its better to build slowly under your own steam and be true to your idea than run fast and water down your idea.
Re: Investors - anyone have any experience with them?
I’m feeling a lot of support on here from you guys. I really appreciate it. Makes me want to work even harder to take Fantastic Foreskin to the next level all in my own!
You guys are great.
