Spoiler alert - This is a true story. A story that shows that there is a huge demand for the 99% of non-listed businesses that are in search of capital to grow. In other words - there is a demand for Chainium.
Back in 2013, I started my own business with two co-founders. We built up a souvenir boutique with locally sourced products in Vaduz, Liechtenstein. The Hoi shop, so it’s called, was self-financed from the start — quite a risk for me considering we were not working in the retail business before. But it all went well.
Five years later, we sat together to review the status of the business and our plans for the future. One of the challenges we have is the small size of the market (38,000 inhabitants) and products that are specifically made for the country. So we decided to go into the Swiss market.
We did what every owner would do: undertook market research, talked to manufacturers, retails shops and setup a budget that included the usual suspects (additional man-power, licenses, product development, production cost, additional warehouse space, distribution logistics and much more). At the end we came up with the need for a high 5-digit investment figure. Now the key question came up, that any owner has to deal with when they have an idea to grow — how will we raise the capital for the new endeavour? As a small, non-listed business, the options we discussed were rather limited:
- Borrow from the families? This was a clear ‘no’ as none of us wanted to mix business and family. There are too many cases where such a connection didn’t work out well.
- Borrow from a bank? We took the most standard approach for most business like us, we applied for a bank loan — but our endeavour was considered high risk and comparable low profit. In addition, we would have been required to put together a formal business plan. This would have taken up a lot of time, that we didn’t have, as the important Christmas period was on the horizon! So this was also not an option.
- Venture capitalist? We didn’t know any and we’re not a real good case for a VC: steady, but slow growth, limited markets, high demand for human resources. In summary - not sexy for a VC.
- Crowd-funding? We looked at the cost involved and the lengthy process and decided not to give it a try. Another reason was the risk of not reaching the investment sum that we were looking for and returning all the money — hence wasting time and effort.
- Use our private money? This was where we ended up. Does it sound like a surprise? Probably not as this is the only viable option for most entrepreneurs after having considered other capital raising options. In our case, none of us were keen to invest our own money again but there was no other decent choice. So this was the best of the bad options.
What are you complaining about? A lot of people might ask. You at least have an infrastructure of wealthy banks, business angel and venture capitalist networks in your country and there are crowdfunding platforms. In summary — you have options that most of the businesses in need of capital don’t even have in their home countries. In some countries, corruption is a reality and corporate loan rates can be above 20%.
What would our preferred capital raising instrument have been? We were willing to give away equity. We have a very loyal customer base (also on social media). A solution like Chainium would have been ideal to help financing our capital needs for the expansion: simple, free and fast.
If only Chainium existed when we wanted to raise capital…but it will be soon.
Chainium has rebranded to Own. For more information about our brand change please read this medium post.
