I am looking to invest in a crypto related business from anything such an exchange to a payment processor, I am open to any ideas for investment. I saw several posts on this forum for businesses looking for investment so I sent an interest offering to consider investing in them.
I will not be mentioning the name of the person that sent me the message nor mention the start-up by name however after I posted a message on his thread mentioning I would consider investing I received a message stating that he was looking for $40,000 as an initial milestone and then once that was reached it would be $200,000 for the next:
Hello, sorry for the delayed response. My email notifications stopped working for a few hours and I missed your message. We are looking for investors, our first milestone is setup at $40,000, but once that's hit it jumps to around 200k. If you're wanting to talk, I can give you my Skype or phone number and we can discuss over that? We are working on the drafted business plan to send to our potential investors and hoping to have that finished up shortly
This was my reply:
Hi, no problem about the delay, good to hear from you. Sorry but in my opinion $40,000 is a lot of money for the first milestone alone. People have launched their own exchanges for less than a tenth of that amount in the past and they are not worth $40,000 even after a significant time trading. I definitely would like to invest in a crypto exchange and maybe even merge own start up bitcoin payment processor for websites to integrate in to it at some stage but the figures stated do not make this a viable investment for me.
I wish you success in your project but I will not be able to invest.
After I sent a PM back, politely declining to invest I received this reply:
I wasn't asking you to invest that much at all, was just stating our first milestone. And with all due respect, I don't think you have any idea how much an exchange costs to startup. You do realize this is a financial corporation, correct? $4,000 (your one tenth proposal) is maybe enough to cover C-Corp and lawyer fees. Developers, marketers, legal advisers, care agents, do not work for free. Development is not free, and neither are servers. Getting booths at Bitcoin and digital conferences worldwide, is not free. Not sure if you were misunderstanding the business type, or though we may have been another alt coin or what, but this is a multi-million dollar company, and if you think $40,000 is too much then you are in the wrong field to be investing in. $40,000 for a startup is actually significantly low to bankers and investors, not quite sure you are ready to be playing in the game yet. Once again, not trying to be rude or anything, however I'm also not going to be soft about it. You're not ready for any financial investment until you get a better understanding of how actual, legal businesses operate within the United States.
Now, I am not going to comment on the condescending aspects of the reply vis-a-vis my the polite message I sent wishing him success. I would however take the opportunity to advise anyone who considering investing in any business here to think long and hard about it.
This one claims to be a multi-million dollar company yet is seeking $40,000 as a first milestone then even though it claims to be a multi-million dollar company will further seek $200,000 for the next milestone.
Apart from researching the viability of any business, my advice is to try to get to the know the temperament of those running the project because if they have a superiority complex or anger management issues then they probably will not be the sort of people you want to be dealing with regardless of whether things go positive or negative with the project.
In most cases I see no difference between the "hype" generated by the get rich quick altcoin launches from a few years ago or most ICOs today, with any business claiming they will be a certain success when they have not even traded.
In my opinion, in alot of (not all) cases it would be better to have a project manager as an investor/shareholder, then have the technical team as shareholders within the business too rather than ask for people to invest unless significant funds were required. Like I said, in my opinion and also not in all cases.
Keeping all that aside, what costs do you think are involved in starting up an exchange nowadays? As a start up, how much do you think exchanges such as Nova, Polo and Yobit invested to get off the ground? What sort of costs are involved for example, if say an exchange launches covering just a few altcoins then continues adding 5 or 6 altcoins a month to increase customer options and along with it also increases the hosting capacity for extra traffic and daemons. What about dedicated server hosting costs, benefits, pros/cons versus AWS EC2 and alike? Legal fees would be minimal. Thanks to forums like this and various social media it would be free to get the word out there literally.
In your opinion when Coinpayments was started as a payment processor by two brilliant coders from this forum a few years ago, how much do you think they invested money-wise to get going? They probably did not start with 60+ currencies at launch so must have added them step by step. Also the manner in which they hosted their daemons may have changed over time and evolved too. All that shows you can start a business and grow with a small investment rather than pump money in to a business that quite frankly, has not even started and has no proven track record. When I was thinking to start my own bitcoin payment provider for ecommerce websites, I used two servers. One server ran the php UI website for the sign-up process and client account. The other ran the bitcoin daemon which generated wallets for new customer transactions then updated the php server with the bitcoin confirmations, updated the order for the client UI and sent sent the cap number of bitcoin offshore in the event of a hack. Both were for test purposes only and hosted at AWS at minimal costs. I am now reviving that project and might launch it.
It would be hard anyone for provide ballpoint figures but just as an estimate using BTC and LTC as the base and then say 5 popular altcoins to start with:
- If someone had the technical know-how and could set it up how much would be the minimum investment required to launch a crypto exchange?
- If someone did not have the technical know-how to set it up, how much would be the minimum investment required to launch a crypto exchange?
Thanks
