Project financing concepts. Ref: junker.de and indiegogo.com and others.

Discussion in 'Aircraft Design / Aerodynamics / New Technology' started by jedi, Dec 21, 2017.

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  1. Dec 21, 2017 #1

    jedi

    jedi

    jedi

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    Financing is an issue with many projects. Assuming a viable project with a nearly impossible outlook for conventional (bank) financing, what are the prospects and issues with alternative financing?

    I offer the above as a bad example for a starting point.

    Www.jinker.de


    Indiegogo raised 7 percent (364 EUR) of the 5,000 EUR flexible goal.
     
  2. Dec 21, 2017 #2

    bmcj

    bmcj

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    Well, what do you expect from a plane produced by Kentucky Fried Chicken?

    B0A220CE-76D0-45FA-A09B-086233A333D1.jpg
    (Click on the image for full resolution then look down at the bottom.)


    After all, that Italian builder beat them to the flying rooster plane design.
     
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  3. Dec 22, 2017 #3

    REVAN

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    That "Jinker" is a pretty far out concept. Even if it had raiser 5000 EUR, it would have had a very, very low probability of success. You really can't accomplish much with 5000 EUR. It's hardly worth even trying to raise the money. Just work some overtime until you get the money you need, unless you just don't believe in the concept yourself. If that's the case, why would anyone else believe in it? I'm inclined to think that this is the category of Jinker.

    First off, I'd say one needs a good idea for a business of which the product to be developed is a part of. The better the plan the easier it will be to raise money. If it's good enough, conventional bank financing won't be impossible. So, the first order of business is to make a business plan that YOU believe in. Then you can start to inquire about how to fund it. If no one wants to fund it, it's time to go back to the business plan and determine where you made errors. Sometimes the big mistakes are harder to see than the small ones.
     
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  4. Dec 22, 2017 #4

    REVAN

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    deleted accidental duplicate post
     
    Last edited: Dec 22, 2017
  5. Dec 23, 2017 #5

    jedi

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    Deleted another accidental duplicate post. Wish I could double my bit coins this easily.
     
    Last edited: Dec 23, 2017
  6. Dec 23, 2017 #6

    jedi

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    I agree. The primary parameter in obtaining financing is Faith.

    In the originating post it was specified that the project is viable. That is a given; you and I know that. It is understood that the inventor believes in the project. If not he would drop the project and go on to something else or continue development on the presumed project to the point where he did have faith that it would be successful, “If only I had the funds”.

    His first problem is to convince the potential lenders that the project is viable. Banks are the most conservative lenders. They generally have more borrowers than they have money to lend and can be selective. The original post crossed the banks off the list of potential lenders for that reason.

    A mental exercise that I have run thru several times is to imagine myself as an 18th century inventor of the bicycle, knowing that I could build a bicycle if only I had more funds. I have gone to all the banks in my area and all indicate they think the idea of a two wheel vehicle as proposed is ludicrous in spite of much evidence that all Roman chariots had only two wheels. I am told they would lend money towards a carriage factory but the bicycle factory, “No Way”.

    Now perhaps if I could build a prototype and demonstrate me riding a bicycle they could be convinced. Still they say “No Way”. They have gotten on my bicycle and were unable to ride it. They insist the customers would have the same reaction. They insist “The vehicle needs to be stable or it is unsafe.”

    Here I am with a beautiful example of a practical bicycle and insufficient funding to produce it.

    On the other hand there is the lottery.

    States raise Millions of dollars every day from the least selective lenders imaginable, the unthinking public. They can do this because the lenders have great faith that the state will pay them in the unlikely event that they are the lucky winner. They can do this because the amount of principle at risk is within their acceptable risk tolerance. They determine that they can afford the near certain loss of principle.

    Therefore, I believe the second most important parameter is the amount of the principle at risk. This value is something the lender must be able to specify in order to stay within his risk tolerance.

    One feature of crowd funding is the ability to obtain many small investors through the invention of the internet. This thread is slanted towards ways to convert from traditional single source funding to multisource funding.

    What do you need to invest $X in an aviation related business adventure? Do the funds need to be held in escrow or would you accept more risk for more reward depending on the amount invested? What exit strategy is needed? Can you wait 10 years like Icon A5 customers or would you need a quicker out?

    I propose that the “Time Horizon” is perhaps the third most important parameter, at least for some investors. The length of that time horizon is also a likely variable among individual investors.
     
    Last edited: Dec 23, 2017
  7. Dec 23, 2017 #7

    REVAN

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    Crowd funding generally falls into 2 different categories.

    One attempts to build something that is returned to the investors. The funding starts a new business, and the investors are returned a product from that business.

    The second attempts to raise funds for an activity or a charity where nothing is returned to the investor other than good feelings, knowing that they helped.

    If attempting to crowd fund something, I think it is important to first determine which category your project falls into and then effectively structure and market it appropriately. Jinker, I would say actually falls squarely into the second category, but was marketed in a no-man's-land somewhere between the two. Something like that should look to raise funding through a site like Patreon, and it needs to convince people that there is some greater good to doing this project, regardless of the outcome. For example, it will help to educate the next generation of engineers, save the environment, create or rescue something that people may care about, etc....
     
  8. Dec 23, 2017 #8

    REVAN

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    delete duplicate post. Something's wrong with the forum, that this keeps happening....
     
    Last edited: Dec 23, 2017
  9. Dec 23, 2017 #9

    BJC

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    Crowdfunding:

    02DF9463-5104-4D1E-BC74-F39DD9847FBF.jpeg


    BJC
     
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  10. Dec 23, 2017 #10

    jedi

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    My father died of a stroke. I need money to become a doctor.

    Ok. We agree there is more money in medical school than in aircraft design. That is why GA is dying. I believe in the the old becoming new and the new becoming new.

    With enough time the ridiculous becomes impossible, the impossible becomes doable and the doable becomes common place.

    Consider joining the round earth soceity in the 1400s.
    Sail around the world in the 1500s.
    Suggest that someone try flying in the 1600s.
    Have a conversation with someone 4,000 miles away in the 1700s.
    Make artificial light from electricity in the 1800s.
    Fly to the Moon in the 1900s.
    Have a mobile transporter in the 2000s.

    I can't go to medical school because I have squandered my medical savings on transporter research.
     
  11. Dec 23, 2017 #11

    jedi

    jedi

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    My father died of a stroke. I need money to become a doctor.

    Ok. We agree there is more money in medical school than in aircraft design. That is why GA is dying. I believe in the the old becoming new and the new becoming old.

    With enough time the ridiculous becomes impossible, the impossible becomes doable and the doable becomes common place.

    Consider joining the round earth soceity in the 1400s.
    Sailing around the world in the 1500s.
    Suggest that someone try flying in the 1600s.
    Have a conversation with someone 4,000 miles away in the 1700s.
    Make artificial light from electricity in the 1800s.
    Fly to the Moon in the 1900s.
    Have a mobile transporter in the 2000s.

    I can't go to medical school because I have squandered my medical savings on transporter research.

    BCJ; I am impressed that you in FL could find such a nice photo of my local tourist attraction in WA. Bet you could not do that a hundred years ago.
    On the other hand, some things never change. One hundred years ago that fella's grand dad was on the same corner. The term "Skid Row" originated in the same neighborhood from the hill where the logs were skid down the hill to the waterfront for transport to the mill. If I remember my history, Skid Row became Denny Street when the city did the regrade to shallow the bank so horses and people could traverse it or "make the grade".
     
    Last edited: Dec 23, 2017
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  12. Dec 30, 2017 #12

    jedi

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    To late to delete above post #11 duplicate. Sorry.

    With reference to funding it is also important to recognize that costumers and backers have different relationships with the company. Is it good business to use customer down payments to fund the company as with the Icon A5 and others?
     
  13. Dec 30, 2017 #13

    BJC

    BJC

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    Patience, Grasshopper, patience.


    BJC
     
  14. Dec 30, 2017 #14

    BJC

    BJC

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    Patience, Grasshopper, patience.


    BJC
     

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