The American Obsession With Startups

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Hi, I was just driving down 3rd Street and I saw an old building that had a For Sale sign on it. So I was just thinking it would be a great place to open a restaurant. It would have a really big outdoor eating area and I’ve always dreamed of owning my own restaurant. Lord knows I love food. I can’t talk long but I Googled loans on the Internet and you guys came up so I wanted to know if I could get a $4 million loan or line of credit to buy the building, fix it up, and make it into a Mexican restaurant, or maybe even Italian! Is that something you could do? I would need the money by friday…

This is the real transcript of a call to a Merchant Cash Advance brokerage. Don’t let anyone tell you that the U.S. is not a capitalistic society. Opportunity and entrepreneurship is so ingrained into the very fabric of our being that even self-proclaimed communists and socialists cast away their utopian worker ideals for the chance and self-satisfaction of turning something small into something big. We’re also an impulsive society, a trait partially due to our obsession with immediate self-gratification, but more to do with the fact that opportunities come and go in the blink of an eye. It is for these reasons that an individual who was taught to do market research, create a business plan, and mull things over is instead flying down the road with one hand on the wheel while the other hand is furiously applying for a $4 million loan to finance an opportunity he thought up 7 seconds ago.

How many other people driving down this road thought the same thing? How many of them have access to that kind of capital? Some might and so for the ones that don’t, the fear that someone is going to beat them to it turns them into unrealistic cash demanding lunatics. It’s true. The full service Merchant Cash Advance shops should probably offer John (the name we’re going to assign to the guy driving down the road) a proposal to help him create a business plan, form an LLC, and obtain the necessary licenses. These services would come with a price, a price that many people like John misinterpret as obstacles to be handled once he’s received the $4 Million. As John continues driving down the road, the dream of starting a restaurant is repeatedly crushed as he makes phone call after phone call to business lenders he found on the Internet. “There’s just no help for startups,” he concludes, and decides to hold off until the economy gets better before giving it another shot.

For 37 minutes that day, John was one of the many millions of startup businesses searching for capital. For the Merchant Cash Advance brokerage, he may have been one of the few hundred phone calls an account rep was bogged down with, while trying to help businesses that have been open for at least 1 year. The account reps have probably heard it all. “I want to start a home-based gas station“, “I need twenty million dollars for a good idea that I can’t tell you what it is because I don’t want anyone to steal the idea“, “I just got an LLC and I need $100,000 to come up with some business ideas“, “I’m gonna start an online shoe store and I need money to buy my first computer so I can get on the Internet.” We’re not poking fun at entrepreneurs since there are plenty of those who are really serious. But for the millions that call first and think second, they’re creating a disease unique to the U.S. It’s called startup fatigue. Business lenders are losing so much money by just talking to non-business owners, that they’ve taken to putting up big signs to ward them off.

no startup lending

The Internet is a great example because the cost of one click to the lender’s website can reach as high as $20. So how then does one tactfully express that their financing programs are for existing businesses only? It’s an art form that many have difficulty mastering. Advertisements, which are usually created to rope people in are instead being crafted to keep people out. “Hey Startups, GET OUT AND STAY OUT!” is the marketing campaign some lenders might be considering rolling out next quarter.

beware of startups

We expect that at this point in our post, startup specialists have already stopped reading and have instead taken to writing us long e-mails explaining how ignorant we are.

DEAR MPR,
You are dumb. There are tons of startup lenders out there just begging for business.

We’ll welcome any e-mails like this. Maybe these companies will stop hiding in the shadows and we can finally start helping people.

Raharney Capital, the organization that owns Merchant Processing Resource has a division that connects existing small businesses with financing companies. Coincidentally, they encounter a lot of pre-operational startups and continuously face the dilemma of how to service them.

Their first attempt to refer them out was with Go Big Network, a gargantuan networking service specifically for startups to obtain capital. Their homepage touts:


We help entrepreneurs find funding.


Over 300,000 Startups Have Used Go BIG to Connection with Millions of Dollars in Funding. Join today to connect with our network of over 20,000 investors.

They’ve been around for years and their advertisements can be seen all over the web. Inquiries about referring startups to them for a fee went nowhere as Go Big Network made abundantly clear that they did not want affiliates. Further attempts to refer them the business (even free of charge) went unanswered. It seems that even the startup masters don’t want to deal with more startups.

So we took to LinkedIn discussion groups and replied to the many individuals claiming to be angel investors or startup lenders. All of them backtracked on their original statements, with most eventually revealing that they were really looking for businesses that have been operating two years with positive cash flow. Are they liars? Not really. A young business is technically still a startup. What we did find though is that some Merchant Cash Advance providers are funding businesses that have been open for as little as three months. Not bad! (Check out: Capital Stack, Yellowstone Capital, United Capital Source, and Merchant Cash and Capital)

We thought we struck gold when we joined Startup Specialists, expecting to find lenders swarming the discussions with startup lending spam. Instead, we found no mention of financing at all. Interestingly though, this group was abuzz with activity. Thought you were cool because your post got 1 thumbs up? Thought that nothing was happening on LinkedIn? Some posts in this group are receiving hundreds or THOUSANDS of engaging, thoughtful responses! Sadly, no one seems to know where the money is, but that doesn’t seem to matter to them.

While writing this, our own inbox has grown considerably bigger and our voicemail box more full. Many are reaching out to us with questions about startup financing. The fatigue is slowly starting to set in.

One is a voicemail from Google, asking us to reactivate our Adwords campaign, something this site experimented with in the past with $100 in free ad credits. In their message, the account rep mentions that they have reviewed our site and can help startup lenders like ourselves create successful ads(what gave them this impression?). In startup-obsessed America, a stable, sustainable, and somewhat aged business is a mythical beast. Even Google has somehow mistaken our small business information site to be startup information. Too many people assume that small business means the act of trying to start a business. “Do You Have An Existing Business?” a bank advertisement might ask. Tons of people who don’t will still answer ‘yes‘ simply because the idea exists in their mind. It’s a beautiful thing in America to think that way, but getting off the ground and generating revenue shouldn’t be like winning the lottery, a game that you’ll never win but is fun to dream about.

We have interviewed writers for our site, some for volunteer positions, others to be paid. While instructing them to use small business as the subject matter, almost all of them revert to writing about starting a business. Marketing companies have also made the same mistake by pitching us their proposal to make cool videos for the site and then go on to create a demo video that talks about starting a business. One company actually asked us to provide a script and still they CHANGED IT to talk about how Merchant Processing Resource is a premier helper of startups. WHAT?!!!

By now, we’re running a high fever and the doctors suspect we have startup fatigue. Eleven more people have left voicemails, to request $300, $10,000, or $100,000,000 because they have this really sweet idea to make a restaurant named Chesster’s, (Chester’s with a double ‘s’) because each dining table will have a chessboard on it with chess pieces. Boo ya!! They haven’t worked out all the details yet but they thought the name was brilliant and oh yea… they need the money by tomorrow.

We’ll refer them to SCORE, a nonprofit association dedicated to helping small businesses get off the ground, grow and achieve their goals through education and mentorship. They may not get financing, but they will get HELP. And that’s really what Americans need. There isn’t a lending problem, there’s a helping problem.

Entrepreneurs like Mark Zuckerberg made it tougher for all of us. His progression went from random idea to scooping up cash from a classmate, to billionaire CEO of a publicly traded empire. He didn’t sit down with a SCORE mentor, do market research, and consult with a lawyer about how best to structure an organization. These are things he would have considered as obstacles to achieving his dream before someone else beat him to it. “I need the money by friday because this is going to be big,” Zuckerberg might have told a Merchant Cash Advance account rep who had heard the same story 97 times that morning alone.

Zuckerberg’s whirlwind success story portrays him as a role model genius, a boy who acted and capitalized on the split second window of opportunity while all the pieces fell into place after the fact. The rest of America so badly wants to replicate that. Too many people envision themselves in an interview with a New York Times reporter two years from now to talk about how they were driving down 3rd Street and the idea of starting a home-based gas station just popped into their heads, prompting them to Google business loans, and the rest of their billion dollar story is history. Similarly, when that doesn’t happen, just as many people chalk up their failure to a bad economy, Obama’s unwillingness to help, or the big bad banks indifference to the little guy.

It’s okay to go slow and get your ducks in a row. Hell, doing it this way is probably more honorable than what Zuckerberg did. You don’t need the funds by tomorrow, friday, or even next week. What you need is proof that you can provide a product or service for a profit and then to carefully plan and structure an organization that will last. Raising money should be a contingency for expanding sales, not for registering your LLC or to solidify an idea.

There’s a reason that the topic of small business is inundated with information on how to start one. So many fail to get off the ground. There are conflicting and sensational statistics that claim that 9 out of every 10 startups fail. In startup-obsessed America, it’s probably more than that. We would argue that John’s wild foray into entrepreneurship started when he spotted available space for a restaurant and failed when his first instinct was to search for lenders. In the meantime, a few financial firms got caught in the cross fire and spent money to answer his phone calls. Both sides were left frustrated since neither got what they wanted.

In today’s world there is a growing anti-startup movement. Americans want jobs to feed their families and lenders prefer to invest only in existing businesses. The problem is that without startups, fewer businesses will become established (bad for lenders) and fewer jobs will be created (bad for Americans). Our only hope then to turn the tide is to embrace the startups, not shun them. The message shouldn’t be: Get lost you potential job creating jerks! Every lender (and Merchant Cash Advance provider) should have a model to assist startups in some way. It’s okay to charge for this service and profit from it by the way. Any potential business owner who enters the startup arena expecting not to pay anything out of pocket is dreaming.

If America associates small business with starting a business, can a lender really parade themselves as a small business champion if their public message is to send startups packing? We don’t think they can. Similarly, individuals need to do their part and calm their impulses. Drawing up a plan, forming an LLC, and obtaining the necessary licenses aren’t annoying obstacles to take care of after the fact. You can’t really expect to raise capital on a wild whim while you’re flying down the street talking about a random building you saw on the side of the road. Imagine how crazy that sounds to a lender?

Patience and hard work, we say. That goes for the entrepreneurs and lenders alike. Let’s help each other, not hate each other. It won’t be easy, but then again success isn’t supposed to be like winning the lottery, a game that you’ll never win but is fun to dream about.

Last modified: September 28, 2013
Sean Murray


Category: internet marketing, Loans, merchant cash advance, MPR Authored, Small Business

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