[swalkergibson]

> They're just about the cheapest form of loan you can get

In what sense? Unsecured credit has the absolute highest interest rates, especially for college students. They are no doubt the most convenient, but cheapest is a bit of a stretch.

[texantbone]

It is revolving credit, so if they just need money to finance AR, it is very cheap indeed (0%). They can alternate cards each month to double the amount of 0% money- provided they are just using it for AR.

If they need the money to finance operations, then their model is wrong. Never borrow against a credit card for operations, only for AR because of the crazy interest. Otherwise, you end up without sales and large debt. Ask mom and dad, grandma, you uncle, friends if the goal is not not give up equity but you need cash for a longer term investment in the company.

[ghiculescu]

Compared to paths 2 and 3 (incubator or seed round).

I'd say that at this stage of the game, paying some interest is probably much cheaper than giving up a stake of the business. Not least because paying interest is really annoying and will teach you to make better decisions for cash flow, which will better equip you as the business grows and you do consider paths 2 or 3.

Disclaimer: I'm im Australia, it does seem like credit cards don't hate students as much here. We were all approved for decent credit while studying and it's the main reason our startup is going strong on path 1.

[raverbashing]

Really, you are dangerously wrong.

Credit card is one of the most expensive credits available. Economics 101. If you need a loan go to the manager and talk to them, this is cheaper.

"I'd say that at this stage of the game, paying some interest is probably much cheaper than giving up a stake of the business"

Any percentage of zero is zero. If the company goes down, it doesn't matter if you kept 80% or 50% or less, it is worth zero. 100% or zero is zero in the same way. Yes, people have to take care when selling equity, but investors are not only there for the money but also connections and advice.

[sharemywin]

If they are successful, they could lose 20%-40% equity in the business in their first round or two. If it becomes a 100M business that's 20M-40M. For a few million dollars. it's really expensive money, but doesn't necessarily make it a bad decision.

[swalkergibson]

This is assuming that someone will buy their stake in the business. It seems to me that there are some holes in the business model, and the traction might be overblown. For instance, the website suggests that the most expensive advertising package is $1,200/year and there are about 75 properties listed on the site. While it is a gorgeous product, it seems to me that they are going to have trouble raising funding in such a competitive industry without much higher numbers.

[sthielen]

The rental housing market moves incredibly fast, and properties go on and off the market daily. The most desirable houses we list sometimes only stay on the site for a few days before they go off-market, and some of the less desirable ones will stay on for weeks. Of course, this is not a metric we can, in any way, attribute to our success--most of these properties are posted all around the web and there's no way for us to know if it was rented by someone using our service--however we've had local property management firms reach out and tell us they've had a lot of good leads come from our service.

Our database is the sum of all properties currently on the market that are willing to rent to college students, and that number is small. It is a very competitive, fast-paced market, and that's the reason there is a problem in this space in the first place.

From our experience cold-calling properties, 3 out of 5 rental properties are completely unwilling to rent to college students. Many will just hang up the phone. From the already small number of desirable (i.e. close to campus, not absurdly expensive, etc.) rental properties on the market at any given time, only about 40% are willing to rent to students. But we add new properties to the site daily, so our inventory is constantly cycling.

With regard to our pricing, it's something we came up with last week, and we fully expect it to be increased if our current successes in sales justify it. We have additional monetization strategies in development as well--a $1000 ad is not the be-all end-all of our revenue stream. But hell, at this point we're just excited that someone is willing to pay for this thing we've invested our lives into over the past few months.

[ghiculescu]

Yep. Agreed on that. Without a decent model, no amount of credit (however well managed) will do the job.

[corkill]

They are the cheapest in terms of founder time.

You don't need to apply or be approved by anyone you already have access to the funding.