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Buster
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quote:

If the performance of their existing locations is not sufficient to be able to utilize debt capital, then that means the new project is a bad idea for investors.

Assuming that they can raise debt, but this is their preferred option, then that means that they expect investor returns (ie what the founders are giving up) to be less than their cost of debt. Given that this is risk capital for the investors, that means that the founders are not expecting (or will never be willing) to give the investors more than 4-7% ROI.

Either of these scenarios indicates that an investor should laugh at them and walk away.

The first question that any investor should ask themselves in these situations is "why am I getting access to this investment". There are ALWAYS people who have looked at any investment you might do and rejected it for one reason or another. So you can assume that you aren't the smartest person at the table - but the game is to ensure you aren't the dumbest, either. This kind of investment literally puts you at the end of the investment opportunity food chain.

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Old Post 03-30-2017 02:21 AM
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canadian_hustla
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quote:

Memorandum found on google! (Pdf goes right to download)

clicky

Imo i am not really sure if i would want to invest in this. While i like that the startup costs are super low, (read the memorandum.. they are going to be leasing a space of a former restaurant. So equipment already on site.), and ebita multiple seems fair market value, but i do see issues as follows:

(Disclaimer - i used to finance restaurants (bank job) for a living)

1. There is pretty much no exit strategy,

2. the dividends are miniscule; and that is even if hey were to hit proforma sales from day 1. It would be helpful to see the f/s for their other restaurants

3. Restaurant business is highly risky and capital intensive, 80% fail within the first 5 years. Trust me i have financed my share of dogs lol

4. Why are they not getting a canada small business loan for the equipment and ti's? 90% LTV, prime+3%

5. Imo seems like a 0 equity deal. Investors take all the risk... i didnt see the uses of funds (if any) for the owners

EDIT : owner equity is $50k via sale of existing restaurant equipment. $50k BV or MV?

6. Why consolidate debt from an existing restaurant? This scares me

7. I would like to know more about the lease (i think its 10 yrs), step ups?

8. Investors will own approx 50%. What does approx mean? What if 49.9% = no control?

9. 4% royalty on sales... if i was a betting man i would think that this opportunity is a test to see if they can partially franchise, start locally and perhaps expand provincially or federally

10. Going back to 2., what happens if the restaurant loses money? Is there risk of additional cash calls?

11.imo i am not a lawyer but i would think the investors should form a LP and the LP company should register a GSA covering PAP on all the assets of this location to protect their interests.

Neat idea though

Last edited by canadian_hustla on 03-30-2017 at 02:56 AM

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Old Post 03-30-2017 02:52 AM
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secol
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quote:

haven't looked into this too much, but reminds me of choklat

https://www.reddit.com/r/Calgary/co...amp;sh=b2630c70

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Old Post 03-30-2017 02:39 PM
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suntan
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quote:

Originally posted by secol
haven't looked into this too much, but reminds me of choklat

https://www.reddit.com/r/Calgary/co...amp;sh=b2630c70

LOL, I know Brad Churchill. He's like the white Nenshi.

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Old Post 03-30-2017 02:59 PM
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sputnik
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quote:

Originally posted by blitz


It's not an actual scam, it's just a clever way of getting interest free money for a long period of time.



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Old Post 03-30-2017 04:58 PM
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suntan
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quote:

I guess no one here has any equity investments whatsoever.

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Old Post 04-01-2017 05:35 PM
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jwslam
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quote:

We have a few exciting updates!

-we have found a very experienced Texas born chef to help us expand the menu;
-We added a big benefit to the discount we are now including a 10% discount to Holysmoke Manhattan & Holysmoke 16th with the Holysmoke Platinum Card!!

We are having fairly good uptake in a short time it looks like we have interest from over 100 shareholders so far. I wanted to give you a heads up we may cut off the offering early (within the next 2 weeks or so) and to see if you have interest in participating. As a reminder the minimum investment is only $500 ($1500 max) and we can accept Debit or Visa.

__________________

Last edited by jwslam on 04-16-2017 at 01:00 AM

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Old Post 04-15-2017 09:43 PM
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bourge73
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quote:

Not going too well hey .... shocking

__________________
A Ferrari is a high maintenance chick, you spend money regardless of what you do with her. You can baby the C63, or slap on all seasons, and you won't be spending anything but yearly maintenance. Of course that's like dating a stripper and refusing to fuck her, which would make you gay.

Originally posted by Rage2

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Old Post 04-16-2017 12:14 AM
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jwslam
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quote:

Originally posted by bourge73
Not going too well hey .... shocking


Edited my post

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bourge73
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quote:

Originally posted by jwslam

Edited my post


FKR

__________________
A Ferrari is a high maintenance chick, you spend money regardless of what you do with her. You can baby the C63, or slap on all seasons, and you won't be spending anything but yearly maintenance. Of course that's like dating a stripper and refusing to fuck her, which would make you gay.

Originally posted by Rage2

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Old Post 04-16-2017 02:56 AM
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