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Thread: Investors

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  1. Question Investors 
    Join Date
    Jul 2010
    Hartford CT
    What kinda people or groups did you target to get some of your initial funding?

  2. Default  
    Join Date
    Dec 2004
    Hickory NC
    Thats a Great question I cant wait to see some answers .

  3. Default  
    Join Date
    Nov 2007
    I think this is one of those things where each situation is different. It depends on who you know, who you can get in touch with, and who has money to part with. There are several problems with investors. The first being that most if not all will want some security for their investment. This generally means real estate or other hard assets. And they will want a good return on their money as well (interest and/or profit).

    In the past, many of these threads led to discussions about how to get going as cheaply as possible as the best way to get into haunting. There were some absolutely incredible ideas about how to do this, but most of the replies from the original posters ended along the lines of: "No thanks, I'll just wait for someone to dump a pile of money in my lap and do it in a big, easy manner."

    Maybe some of those original posters can give you an idea how that's working out for them.

  4. Default  
    Join Date
    Jul 2010
    Hartford CT
    Someone recently said you can expect 100-150k in advertising costs which I don't think many people have laying around. I was maybe thinking a 100k budget with a few investors and offer a nice 3yr return/interest rate on their money. I wanna be able to be big enough to be worth the drive and ticket price.

  5. Default  
    Join Date
    Aug 2003
    Northern California
    I think you should start by identifying the people in your market that love Halloween (or maybe something close like a Disney's Haunted Mansion fan). Then start seeing who else they know that likes the same thing and filter that out to find out who has a high net worth. These people would be more likely than any other investor to invest in you. Traditional small business investors probably will not back you, nor will most any bank give you a business loan to start a Haunted House. Haunted Houses are extremely risky and in comparisons to other places to put money to work, they have a very bad return (even in this economy). So start with people that already love the genre and it should be easier because they can feel and brag about being associated with the event. They get an emotional payback as well as (hopefully) a financial one.

    Another, but much less likely or desired, investor could come the way of nightclub or music promoters that have made it fairly big. These people will at least have some since of events and how they can turn a profit. The problems with these types of people can mount very quickly however. 1) While there are many great people working in the nightclub or music promotions industry, there are a lot of less reputable people as well (more so than the average industry). 2) These people may want to become "too involved" with your show and basically edge you out of management because they are the money and they think they know a thing or too more than they do. DON'T become his/her employee, remember you are the Haunted House expert in this and they should understand that while their feedback and ideas are always welcome YOU are the Haunt Director (this goes with almost all outside money). 3) Remember that these guys see this as just another event, they might even have competing Halloween events.

    Some other tips on fundraising:

    - Start early. Plug yourself into the community, plan, do some basic financial modeling (cash flows for 2-3 years should be sufficient). Have you been doing a home haunt or working for a charity haunt? Take a ton of pictures and do a lot of Halloween related projects--remember you are selling these people on you being the best person to do a haunt like the one you in vision. Take them to other Haunted Houses in the last week of October on a Friday or Saturday to get them excited about how many people want to pay for a Haunted House.

    - Put together a syndicate. No, I don't mean some sort of Halloween Mafia, but rather a group of investors who bring money and/or some unique asset to the table (read company because you are a legitimate LLC or S-Corp aren't you . Maybe someone has the location, 2 others have $20k-$30k, and someone else...well fills in another hole in skills or assets that you don't have (ie you suck at woodworking and you have a general contractor as a partner). You will own less of the company but at least in the case of an LLC, you can be the Managing Member who is responsible for well managing and runing the company. Maybe you only have 30% of the company left but you got it off the ground and you can build buyout clauses into the LLC agreement that allows you to buyout your other LLC members over time. ***Please consult a local attorney that SPECIALIZES in corporate formation, and not your uncle Jack the divorce Lawyer. I am not a Lawyer! You can get the basic documents off of LegalZoom, or better yet DocStoc.com (cheaper and very vetted--you can buy a 1 month subscription and get all the Documents you can handle).

    - Speaking of Lawyers, they are a great group of people to help fill out the rest of the money you need. They (as well as accountants) typically know the high net worth individuals you want access to. Hey maybe they have always loved Halloween and want to invest themselves!

    - To write a business plan or to not write a business plan. There is another post on this forum with lots of opinions on the matter. This could be an entire series of posts so I'll only say a few things. When trying to get money from other people for any venture you'll have to give them something. I don't see the advantage of giving them a whole business plan because I feel most people will not read a 30-50 page business plan. I would have a 1-2 page executive summary that covers everything that would be in you business plan in brief. Think of it as the readers digest of a full business plan. Ready to go with that I would have three years of projected cash flow statements ready for them to review. ***I could also write a whole post on cash flows, but let me just say: be very detailed in you year one projections and you can be less detailed in years 2 and three (because seeing the future is hard and the further you go out the less accurate it becomes, even though I've never seen any projection for a new company that worked out to be true). You may want to have written a full business plan just so that you know what you are talking about and can be consistent in your story (ie you say your going to have flyers but did you budget not only for the design and printing but also for the costs and time associated with distributing them?). Finally, you will probably also want a pitch deck. This would be an even more broken down version of the executive summary. Think 10 power point slides with builit points, no sentences and lots of pictures and charts/graphs. Check out Guy Kawasaki's advice on pitch decks for Tech startups (blog.guykawasaki.com/2005/12/the_102030_rule.html#axzz1JGmOaHhi) and adjust according to you and your potincial investors needs.

    - Start a Kickstarter (kickstarter.com). You cannot solicit investment of non-publicly traded securities to people you do not know or that are not "accredited investors" per the SEC but you can solicit donations! So go there and start a campaign to get the word out about what you want to do. See if you can get some money free of any strings except that you have to spend it on building your haunt. Google around for some tips but in general don't try to raise everything you need from here. You set a funding goal and if you don't hit that number you get nothing. So do something reasonable ($5-$10k sounds reasonable). Start your twitter and facebook profile for the haunt now and promote it. The upside is you already have a group of people who are interested in your haunt, so get them on your facebook and twitter so you can keep in touch with them. Finally, create tiered donations. Maybe $10 gets 2 free tickets, $25 gets tickets and a T-shirt, $100 gets tickets a T-shirt and VIP enterance, etc.

    If you are still reading my dribble, I'm sorry, I'm a business guy not a writer. I hope it helped!

  6. Default  
    Join Date
    Aug 2003
    Tyler, Texas, United States
    Sean makes so many good points. You must have the appearence of being passionate and knowledgeable for what you do in the haunting world. There are haunt specific investors but they find you. All very hush hush secret. People that don't need to be eductated from the words what is a haunted house. It is very tough to make a cold call and have it be successful but when a call comes you need to know your stuff and be confident.

    When mine calls I say thanks for calling, I have my pants down and have my credit card number right here! Oh you aren't the sex line I called 40 years ago when I dialed 1-800-EAT-SHIT?

    I guess what that means is you develop a close relation ship to someone if you can do that on the phone. You are going to have to have some level of repore, it isn't a cold business deal like going to the ATM or applying for a credit card. It is also not like sitting before a panel to see if you Charles Manson should be paroled at this time.

    There are people that know haunts work, what makes them work and there are right answers and mumbo jumbo and manuscripts aren't going to mask whether you have enough experience. With haunted houses or business. There are already syndicates and groups that typically have similar social back grounds and are professionals in their fields that have precious little free time to actually have their own event.

    If you were to come up with a manifesto or a 50 page business plan and hand it to someone local to you, you just might have taught someone to become your competitor rather than your mentor or helper. They will watch you build a market and capitalize on their unique knowledge somehow. So who you propose all of your formulas to better be well known to you. Having the reviewer sign a non disclosure agreement is something you really don't want to have to follow up on unless you have your own Bruce Wayne level resources.

    It will be someone that has been familiar with you somehow for a while and has educated themselves rather than you are going to do 100 presentations and someone will possibly sign up as your AMWAY affiliate.

    SO Sean is completely right about having a positive prescence in the industry of a period of time and to be accessable to the community.

    Another fabulous post from the U.S.Department of Wild Imaginings, now in spectaclar stereo, sponsored by the Adhesives and Sealants Council, suggesting ways to stick things together since the 1800s. Not fabulous in a gay way. Your results may vary. Illinois residents add 8% sales tax. These posts have been made by professional post makers, do not try this type of posting on your own without extensive training, lovely assistants and a trusty clown horn.

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