Are loans from Individuals common for startups? Is it a good way to grow?


I am the owner of a website that distributes digital content (photo/ footage/ music) for the film, interactive and media industries.

We launched four years ago and are among the market leaders in a niche of our field.
We have 650K registered users and revenue doubling every year (in the mid six figures at the moment).

We want to grow, and this can be done by expanding into vertical niches but also by acquiring competitors and content. We need cash, but I don't like the idea of giving equity to an investor. I enjoy the freedom and total control and I think that partners can complicate things.

I 've invested a few hundred thousand dollars from family money and taken out a loan for 130K USD (put a small apartment as collateral). Although I 'm doing fine with repaying it, I can't get another loan for now through banks until I repay this one in four years.

Therefore, I have thought that a good way to grow would be to get a loan from an individual.

I have three main questions:

1) Have you heard about this happening? How does it work usually?

2) The company is based in the E.U.
Do you think this complicates things for U.S. investors and/ or scares them away?

Personal Investment Investors Loan

asked Feb 25 '11 at 15:34
14 points
Get up to $750K in working capital to finance your business: Clarify Capital Business Loans
  • Are you based in the UK? – Zippy 13 years ago
  • No, in another small country, don't want to get into much more detail in public. Are you in the UK? – User8084 13 years ago
  • I have a feeling I know your company, since in my last company we may have been buying stock footage form you :-) Big fans. – Apollo Sinkevicius 11 years ago

5 Answers


First, if you have 'mid six figures' income now, you need a good CFO to see what opportunities there are to fund growth out of better financial management. This could be by improving working capital management. And it could be by identifying opportunities to make a better case to your bankers to extend credit through overdraft facilities or term loans, probably including a review of existing covenants and securities.

Second, you need to think through what you're looking for and what you're offering. It sounds to me that you're looking for risk money, and if you're only looking to reward that money with bank loan-type interest, you're essentially looking at the three Fs (friends, family and fools).

And if neither of those gets you the result you want, you're going to have to accept that you need to raise funds in exchange for equity. In that case, get used to the idea that professional investors will rightly demand more accountability than you're used to, but 'interfere' far less than you seem to expect.

answered Feb 26 '11 at 18:46
Jeremy Parsons
5,197 points


Check out FundingCircle. It is a platform to enable individuals to make loans directly to small businesses. Very cool.

answered Feb 26 '11 at 19:57
871 points
  • Do you know if they have anything like FundingCircle for the US? – Matthew Dorian 13 years ago
  • @matthew, comes to mind. – Kenneth Vogt 13 years ago


If it's not too late, I see plenty of individuals who make loans to start-ups. They seem to be "friends and family" type lenders, however. I'm not aware of any way to find them other than to spread the word among friends and family, but if there are groups of individuals that make loans to small companies, I'd actually be interested in joining one, as the rates are usually pretty decent.

answered Aug 20 '12 at 09:33
1,747 points


EU is a very different funding world from US. Company I have just left, where I managed 4 rounds of funding, was owned by EU and US angel investors (40+ in total). Also, my father has built multiple companies in EU (yes, I grew up in EU). So I have gotten familiar with both sides.

Without going into 4000-word dissertation, here is what I have learned, that may be useful to you: EU is a lot more conservative than US. Either funding is highly collateralized at the lower end or the deals are made with a handshake and millions of Euros with docs often not even drawn up. The handshake deals don't happen without heavy track record and heavy connections.

So lets assume you are not Habsburg.

Since you have a profitable and scalable business, you may be able to structure an equity deal with greatly reduced voting and control rights. So don't be too European about equity part. There is a way to structure a deal where you don't give up too much control, but you should take the risk of giving up some for the higher trajectory in scalability of your company. Balance can be found, especially in more measured EU. As long as you keep your eyes, ears, and mind open, it is likely you can find the investor who will work with you.

answered Aug 20 '12 at 11:01
Apollo Sinkevicius
3,323 points


It's unlikely that you will find an individual who would offer loans - unless you have a very helpful and willing member of the family or friend - but you could try crowd funding.

Of course, equity investors can bring a lot to the table (experience, contacts, ideas) and these things shouldn't be underestimated. You may have to part with some control but the payoff can be worth it, especially if you find an investor who is a good fit for you and your company. If you're sure that you're not willing to part with equity though then have a look at our website for other sources of potential business funding, although note that our website is aimed at UK companies rather than those in other EU countries.

It sounds like you're entering a very exciting time with your business.
I wish you the best of luck with it and do keep us posted.

answered Aug 23 '11 at 19:35
Sarah A
1 point

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