Wednesday, February 18, 2009

Mark Cuban Wants to Fund Your Company (maybe)

Will Mark Cuban fund your company? You never know.

In a recent blog post, Mark Cuban committed to funding any entrepreneur with a proposal that met certain criteria. He called this commitment his own personal "stimulus plan" and stated that entrepreneurs can "lead us out of this mess."

To quote Cuban:

As I find businesses I like, I will use the email address you provide before you post to get in contact with you. There will be a standard agreement, you can take it or leave it. Once I have done the standard agreement, I will post it here for all to see. This will definitely be a work in progress. Maybe it leads to great things, maybe it leads to nothing. We will find out. I'm not going to claim a minimum or maximum amount or total I will invest. I'm not promising I will definitely invest anything. If nothing comes along that I think is viable, that's the way it goes. Hopefully I will invest in quite a few businesses that will lead to something more.

Here are the criteria:

1. It can be an existing business or a start up.
2. It can not be a business that generates any revenue from advertising. Why? Because I want this to be a business where you sell something and get paid for it. That's the only way to get and stay profitable in such a short period of time.
3. It MUST BE CASH FLOW BREAK EVEN within 60 days
4. It must be profitable within 90 days.
5. Funding will be on a monthly basis. If you don't make your numbers, the funding stops.
6. You must demonstrate as part of your plan that you sell your product or service for more than what it costs you to produce, fully encumbered.
7. Everyone must work. The organization is completely flat. There are no employees reporting to managers. There is the founder/owners and everyone else.
8. You must post your business plan here, or you can post it on slideshare.com, scribd.com or google docs, all completely public for anyone to see and/or download.
9. I make no promises that if your business is profitable, that I will invest more money. Once you get the initial funding you are on your own.
10. I will make no promises that I will be available to offer help. If I want to, I will. If not, I wont.
11. If you do get money, it goes into a bank that I specify, and I have the ability to watch the funds flow and the opportunity to require that I cosign any outflows.
12. In your business plan, make sure to specify how much equity I will receive or how I will get a return on my money.
13. No multi-level marketing programs. (added 2/10/09 1pm)

If you are interested in getting some of Cuban's "open source funding" click on his blog link and apply by leaving a comment. More than 1300 people have already done just that.

2 comments:

  1. Do you have any examples of the types of businesses that could actually meet Cuban's criteria? Seems to me if any start-up or infant company could get to break-even within 60 days and profitable in 90, everyone in the world would want a piece of it. As for posting your business plan on the internet for all to see, in your experience how many entities seeking funding would be willing to do something like that and how many are wedded to getting a signed NDA beforehand? Furthermore, what are the dangers of that business plan posting (particularly in the case of an infant business) being treated as a public offering of securities?

    More importantly, what does this mean for the Chicago Cubs?

    ReplyDelete
  2. JD -- You raise some very good points. I will be interested to see what sort of ideas Mark Cuban invests in, if any. His blog post has already received 1500 responses, for what its worth.

    On the NDA question, this is a sensitive issue. It is not uncommon for a VC to refuse to sign an NDA in all but the most IP sensitive industries. On the other hand, a strategic investor will commonly sign an NDA and PE firms sign them routinely. Founders are often advised to always get an NDA and this may ultimately backfire on them with the potential VCs. The founder may come across as inexperieced and naive in some circumstances.

    I think you public offering question is an interesting one. I will consider it and blog on the issue soon.

    Thanks for the feedback!

    ReplyDelete

 
Creative Commons License
Dividends and Preferences by Hank Heyming is licensed under a Creative Commons Attribution 3.0 United States License.