Financial engineering your way to startup your business

Ok one topic that I seldomly aboard during my interventions at some of my geek meetings I have down here in cancun is the topic about fund raising for enterprising. And here is a topic that I am usually appealed but really never confronted or at least be able to debate. The topic lies on the lack of knowledge and over simplification on the way of getting money.

Like I said in the past, most people here reffer to their government for everything. Entrepreneurial topics are full of governemnt funded as a valid and almost unique way of getting capital. Most mexicans believe that their government will take care of them and they are in the obligation of providing the means to encourage prosperity.

I usually I am dettached from these talks maybe for cultural reasons. However also for susteinability reasoning. Most of the times, liberalistic U.S. mentality of self sustainability, avoid any contact if possible with governments as they are just a way to stumble and delay things from happening thanks to their infinite ammount of bureacracy.

But comming back to the topic, financial engineering is basically the term that I have used to categorize topics related to capital raising for business development. Financial engineering will try to refine these efforts into “out of the box” systems that allow the company or rather entrepeneur to get a way with cheap money to build infrastructure.

One of the blame that I put on traditional way of doing business is that people don’t pay much mind about how to work with money. Money is seen some times as the goal but very little time is spent on understanding money as a tool. From credit, to venture capital, to investments to financials are topics that most people in general entrpeneurs or else avoid at all cost. There is these feeling of finance is about math and for that we don’t want to deal with it because is very scary.

However financial engineering really deals with processes and ways to build cash flow pipes and techniques to acquire resources.

I would be the first one to say that I don’t know about these processes but this is why I want to raise the topic everywhere I go and I am facinated by it. Because of the potentials that these practices gives to people is why we want to have some kind of experiences and case studies and test it in a regional context. To be honest most of these “out of the box” models are also seen as “out of the law”, and a risky business. Lack of understanding also big failures on money laundry and such have given people even less interest to understand it.

So this is why engineering word comes through, because is not just about understanding and master it, but also to modify them, refine them and adapt them to each social structure.

Here are some of the models that I have seen in the past:

  • Angel investments, yes they do exist, but how to find it is the big variable here.
  • MLM, also known as piramid marketing is widely used but also very bad seen.
  • Poncey scheme models, also very risky business, borrow petter to pay john, is something that might not work in the long term, but it does provide some quick capital to at least get yourself started.
  • P2P credit systems, this is a new one, and is a form of angel investment but distributed, this is also what kickstarter have inspired so many people before
  • Asset protection, not really a financial engineer topic more than a asset protection startegy
  • Freemium models, also not a financial engineer topic but a business development strategy and case study nonetheless

I am still in a early search and to be honest I havent really asked google except a few times, but these type  of topics is something that I would love to exchange with people that know a bit more about them.