A friends and family round is a strategic approach to raising capital for startups, often involving close family members or friends with deep pockets. The process involves determining the amount of capital needed and the equity that can be given up. Most friends and family investors invest based on their relationship with the founding team and do not typically issue shares at par value. This structuring is best suited to optimize tax treatment and provide equities in a Friends and Family round.
Raising capital from friends and family is faster than asking for investment from angels or venture capitalists. Founders ask their closest friends, family, and connections for investments in their business in exchange for equity in the company. Understanding the types of investing and funding, avoiding over-diluting equity, and developing term sheets and repayment plans are essential steps in this process.
A friends and family round usually happens before most angels or VCs would consider investing in the startup, often when all the founder has is an idea and passion. The company should not issue shares now, but at this stage, they usually do a SAFE (Safe) Angel round. Friends and family shares often provide initial funding for startups, and a convertible note allows investors to purchase shares at a discounted rate. Any company that issues shares to the public, including friends and family, must register this stock with the SEC.
📹 How To Distribute Startup Equity (The Smart Way)
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What Percentage Of Equity Do Angel Investors Get?
The equity percentage acquired by angel investors usually ranges from 10% to 30%, with a typical stake lying between 15% to 20%. Despite common beliefs, a higher equity stake does not always guarantee a larger return. Angel investing is often less risky compared to traditional small business loans and can be a strategic method for funding startups. Founders may negotiate terms, which can greatly affect the equity exchanged, often settling around 20-25% based on the startup's stage and industry.
For instance, programs like Techstars might demand 7-10% for significant sums, indicating a $1M valuation. Additionally, seed investors may place a cap on valuation between $4-6M. It's essential to understand that although founders initially hold full ownership, the terms of angel investments can lead them to relinquish substantial equity, which can affect decision-making within the company. Lastly, while investment activity by angel investors amounts to approximately $24 billion annually, their coveted stake often aims at balancing control between the investor and the founder.
Consequently, startup equity defines ownership shares among stakeholders and varies significantly based on various influencing factors in each deal. Ultimately, the negotiation process is vital in determining the fair equity ownership between founders and investors.
How Do I Use Friends And Family Options?
To use PayPal Friends and Family, log into your PayPal account and select "Send and Request." Enter the recipient's name, email, or phone number in the "Send money" section. When prompted, choose "Sending to a friend." After that, input the payment amount and optionally add a note before clicking Submit. This feature is ideal for personal transactions like gifts, sharing bills, or covering living expenses. PayPal has improved its process to facilitate easy money transfers between contacts while updating the app's search settings.
Venmo also offers a similar Friends and Family mode for sending money, which is the default; however, users sometimes mistakenly select the goods and services option. For business transactions, it’s crucial to avoid Friends and Family payments; instead, use a PayPal invoice from the seller. The Friends and Family feature is meant for personal payments, ensuring transactions are made between known contacts without service fees.
Overall, it simplifies lending money to friends or splitting costs among family, providing a straightforward digital platform for casual exchanges. Always use the correct payment method for intended purchases to avoid issues.
What Is A Downside To Raising Money From Friends And Family?
Raising funds from friends and family can pose challenges, particularly in managing expectations. Investors from your personal circle may feel entitled to influence business decisions or frequently demand updates, leading to strains in relationships. Mixing financial and personal ties can create misunderstandings, making money a sensitive topic. While approaching friends and family for funding has its advantages—such as low or no-interest loans and flexible terms—it can also lead to significant downsides. Poor management of roles and responsibilities can exacerbate issues; therefore, clarity regarding potential outcomes and expectations is essential.
Notably, investors may lack the understanding necessary to assess risks, fostering higher emotional stakes and potential grievances over financial loss. Family and friends, while supportive, might also demand involvement in the business beyond what is appropriate. Additionally, if the venture fails, it can jeopardize relationships, making gatherings uncomfortable.
Despite these challenges, financing from personal connections can validate your business idea and provide essential capital. To successfully navigate a friends and family round, clear communication and proper alignment of understanding between both parties are crucial. Such diligence may set the stage for future fundraising successes, ensuring everyone remains on amicable terms while pursuing business aspirations.
What Are Friends And Family Stock Options?
Friends and family shares refer to stock offered by new businesses to their founders' close contacts, including family members and friends. These shares typically represent one of the initial capital sources for startups, often termed directed shares. Friends and family financing is crucial as it provides entrepreneurs with essential funding early on. However, under federal securities laws, it is necessary to register these securities with the U.
S. Securities and Exchange Commission (SEC) to legally raise capital. Gifting stock is a common method, allowing recipients to benefit from future stock value increases. The investments largely rely on personal relationships rather than industry expertise. As a popular fundraising method, founders frequently ask those they know best for investments. Methods for investing include utilizing platforms like Interactive Brokers for convenient management.
Under Rule 504, friends and family can invest up to $1 million in securities, appealing due to the familiarity and positive inclination of investors. Typically, in these rounds, founders may give up 10-15% equity, contrasting with greater equity loss in seed rounds. Funding options can vary, including equity and debt combinations. Overall, the friends and family round serves as a fundamental step in a startup's journey, laying the groundwork before seeking professional investors.
Do Friends And Family Invest?
Friends and family often invest in startups primarily due to their relationship with the founders, rather than strategic industry knowledge. These investments typically occur in the early stages of a company's life cycle, specifically during pre-seed or seed rounds. While this type of funding can be more accessible and foster shared success, there are significant risks involved, including potential financial loss and strained relationships. Despite the convenience of raising capital quickly without extensive due diligence, mixing business with personal connections can lead to complications.
Friends and family funding, which accounts for approximately 40% of startup capital with an average individual investment of $23, 000, is commonly the initial step in fundraising. It's essential for both founders and investors to understand legal and tax implications involved in these transactions. Friends and family can offer loyalty and support, making them more invested in the startup's success compared to typical investors. However, careful evaluation of the investment process is crucial to avoid damaging personal relationships.
Structuring funds as equity subscriptions or unsecured loans can vary, and thus it's important to follow proper business, financial, and legal practices when seeking friends and family investments. Ultimately, although the potential for shared success exists, it’s vital to prepare for the risks that can arise from mixing personal and professional spheres.
How Do I Structure A Friends And Family Round?
When structuring a friends and family funding round, it's crucial to assess the capital desired, the equity you're willing to forfeit, and the investment terms. The capital amount usually hinges on your business's size and stage, but realistic valuations can be challenging to establish at this early stage. Typically, investments from friends and family range from $10, 000 to $150, 000, depending on personal relationships and trust. Such funding is often the initial capital to help a startup develop prototypes and gain traction, making it essential for future funding avenues.
The investment process with friends and family is less formal compared to professional funding rounds. These individuals often invest during the pre-seed or seed phases of a business. Structuring this investment typically involves issuing common stock directly to investors or utilizing instruments like debt, equity, or SAFEs (Simple Agreements for Future Equity). Clear communication about goals, terms, and risks is vital for mitigating tension and managing expectations post-investment.
It's advisable to keep professional boundaries while engaging with friends and family, and consulting with a legal expert can help outline structured agreements. Ultimately, preparing for a successful funding round requires meticulous planning and a strong narrative to convey your business vision.
How To Do A Family And Friends Investment Round?
Raising a Friends and Family round for your startup requires careful planning and clear communication to avoid straining personal relationships. Start by understanding different types of investing and funding, ensuring you don’t over-dilute equity. Develop detailed term sheets and repayment plans while determining the exact amount of capital needed. Construct a robust business plan that showcases your company, target market, competitive landscape, business model, and intended use of funds.
Identify potential investors among your friends and family, and be realistic about expectations. Often, these rounds occur at the pre-seed level, where establishing a realistic valuation can be difficult. Approach this process methodically, aligning expectations and keeping communication professional. Generally, aim to raise between $50, 000 and $500, 000 and use a Simple Agreement for Future Equity (SAFE) to protect investors. It’s crucial to inform your investors about the inherent risks of startup investing.
Prepare pitches tailored for your audience and maintain a clear communication schedule throughout the funding round. Consider structuring the investment appropriately and potentially using various instruments like preferred stock, common stock, or convertible notes. Ultimately, proper preparation can lead to a successful fundraising effort while preserving personal relationships.
Are Friends And Family Rounds A Good Investment?
Friends and family funding rounds serve as an initial step for startups seeking capital from their personal networks. Unlike venture capital or seed rounds, which involve larger sums, friends and family rounds are generally used to raise smaller amounts, typically between $10, 000 and $150, 000. Although this round is less formal and quicker than traditional investment processes, it may come with risks, such as emotional strain and unclear investment terms.
The investors, usually motivated by personal relationships rather than structured clauses, may invest through various mechanisms like convertible notes or SAFEs, which offer protection for both parties. Due to the personal connection, these rounds can foster mentorship and support, essential for founders at the pre-seed stage where valuations are tough to establish. However, they should not replace the need for eventual professional funding as businesses scale.
Founders are advised to navigate these early rounds wisely, ensuring they maintain healthy relationships and provide clear communication to their investors about the company's trajectory. Therefore, while a friends and family round can effectively kick-start a business, careful planning and consideration of the associated dynamics are crucial for maximizing the potential benefits and minimizing risks. Overall, the friends and family round is a pivotal yet informal way to lay the groundwork for future growth.
How Much Equity For Friends And Family Round?
A friends and family investment round is a common early-stage financing method where individuals, often friends or family, contribute between $10, 000 and $150, 000 into a startup due to their loyalty to the founders or belief in the startup idea. This informal funding helps entrepreneurs secure quick capital without the rigorous traditional investment process, minimizing equity dilution. Potential investors should first determine the investment structure—equity, convertible notes, loans, or gifts—before approaching contacts, typically during the pre-seed or seed stages of business development. Friends and family investment amounts generally fall between $10, 000 and $250, 000, helping founders make significant progress while retaining greater ownership compared to later funding rounds.
In a friends and family round, founders may give away about 10-15% equity, considerably less than the 20-30% often relinquished in seed rounds. Entrepreneurs need to balance raising enough funds to launch their ventures with the desire to minimize early ownership dilution, ideally keeping it below 25% before attracting larger investments. Maintaining a motivating equity stake for founders is crucial as they lay the groundwork for their startups. Ultimately, friends and family rounds serve as a vital bridge to more substantial funding sources, such as angel investors and venture capital.
Can You Invest Money For Friends And Family?
Investing with others’ money should be approached cautiously, especially if you’re not licensed to do so. It is acceptable to manage joint accounts or money from elderly relatives, as long as there’s mutual consent. While many want to assist loved ones with investments, it’s essential to consider the potential strain on relationships if outcomes are unfavorable. Generally, the consensus among financial professionals is to avoid investing for friends because of the complications it can introduce.
Group investing refers to pooling resources among friends or family to capitalize on collective insights and skills. Although it can have benefits, such as funding startups or real estate acquisitions, it requires careful management and communication to maintain healthy relationships. Legally, most states permit giving free advice to a limited circle of friends or family without a contractual obligation.
Transparency is crucial; everyone involved should fully understand the risks. Although there are legal avenues for accepting investments from non-accredited individuals, it’s wise to follow proper business and legal protocols. Properly structured "friends and family" investment rounds can facilitate initial funding for startups, allowing participants to share updates and discuss risks openly. To maintain harmony and mutual benefit, thorough discussions and clear terms are vital before engaging in any financial partnerships with those close to you.
How Does Friends And Family Investment Work?
Friends and family investors serve as a popular form of crowdfunding, where entrepreneurs gather small investments from their close networks—family members and friends—to accumulate a significant amount of capital. This method of fundraising, often referred to as a friends and family round, usually occurs at the pre-seed stage, allowing founders to gain initial traction before seeking professional investors.
Generally, these investments range from $10, 000 to $150, 000, reflecting the personal loyalty of the investors. Unlike traditional venture capital, friends and family funding is typically interest-free and less rigorous, making it a favored first step in startup financing.
During this phase, entrepreneurs can use the funds to secure office space, hire initial staff, and cover essential operational costs. The collaborative nature of this investment fosters community support and can set a strong foundation for business growth. Founders exchange equity for the capital raised, prompting a shared investment in the company's success. Platforms like WeFunder and Republic facilitate these fundraising efforts, allowing entrepreneurs to create public campaigns to engage their networks effectively. Overall, the friends and family funding round is vital for startups, with 38% of all new ventures utilizing this funding approach as they navigate their early development stages.
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This needs to be an hour article to dive into everything like investor rounds, diluting, classes of shares, voting rights, how to choose advisors, convertible notes?, control, board seats, milestones and math examples through the first few years. Common pitfalls, strategies, valuations, IPO structure, who sets up legal things and accounting? Special attorney or accountants? etc.
Hey Dan! 1 question: 2 co-founders in a startup at 50% each ; investor comes in at X% Equity split is simple and understandable. But when the startup raises further round of investment, the equity is split among all the stakeholders of the company, right? (i.e., the 2 co-founders + investor?) or the earlier investor’s investment % remains in tact and only the co-founder’s equity gets split further? Thanks!
Outstanding article, Dan! Thank you so much! Just what I need! In my case, I have 2 consultants who are acting as advisors but also as the door-openers in the market I am (B2B). They have the best network I could get. Should I remunerate them? Should I give equity, or should I give them a percentage of the sales (and how much would be the common practice)?
I help people/companies go public step by step, I realized some people have super great objectives but don’t know where to start after their concept is complete and ready to get listed. A well organized pitch deck is extremely important and part of the company’s first impression, I can’t emphasize this enough. It’s always fun to witness the beginning of disruptive startup greatness.
Thank you so much for this valuable article, I have an elementary question about it. Should the founders issue the max allowed stocks from the authorized shares, which is 80% for their ownership and then sell from their own shares to the investors ? Or they should own for example 60% only and issue stocks for investors from the untouched authorized shares when raising funds?
I had started a company alone some time back. I met this friend of mine from the college I attended. He really liked the idea and we both see the idea booming in near future. He has asked me to divide equal equity. What should I do? Is it really okay to share my 50% equity for the idea which I thought of? I am very much sure about his skill set and zeal but the thought of sharing a big 50 is daunting me. What should I do? Please advice.
Hi Dan, very well explained, thanks! If I am the main thinker on the concept of the startup and I need my co-founder who will be my technical lead too, will that be unfair if I keep 5 to 10% more equity than my co-founder? It is because, I have developed the concept and I am pulling him in by explaining what the business will do. Do you have any advise please? Thanks again for your help.
This is exactly what I’ve been looking for, for the past month thanks. Do you have any articles on dual class share structure and how this relates to equity and investors. I mean like in the dual class structure, is it that equity is divided into two categories class A and class B? And if so can class A shares be kept for only founders and Team and class B for investors? I am aware that investors would want to have some form of security from class A voting rights, but are there cases where investors are willing to take class B with it’s lesser voting power.
Hello Dan ! Thank you for making this article and helping many others navigating on our startup journey. I like to understand how are investors paid- In shares or in cash? Will they only be taxed if they sell their shares and only for the cash distributed ? What is normally the best way to pay investors? Thanks in advance !
If the total funding of the project is 1 million and if we are giving 15% to the investors. does it means that they are paying amount of 150000 ? then there is also time and dedication of the board member and the investors just paying the money which we are also paying same amount of money. so they must pay more than 150000 to get 15% of the project share right?. I mean for the project evaluation only the finincial part calculated or the time and dedication is also calculated?
How should the equity negotiations go about if the company has just been incorporated, not started operations and not making any revenue? In other words, a non-operating company ‘X’ having 2 co-founders gets an investor that gonna put in the whole amount to start the operations, how should the directors of the company ‘X’ negotiate the equity divisions with the investor in a manner that is most beneficial for them in the long term?
Hi Dan. Great article. A business adds new owners over a ten year span. The business changed value over that time. We need to figure out how to measure equity and share value ten years in. Who owns what percentage of the business? Is it share, stocks or equity we are measuring? Here is what I have and need advise on. Person 1 started the business in 2012 and invested $25k. In 2018 he self evaluated the business at $144k, he added a new minority owner to the business for more capital and help. They bought in at $10k. A year later, he self evaluated the business at $200k, then added three more owners at in for about $8k each. We are struggling to figure out ownership. Some owners put in way more time and resources than others. How do set this up in an equitable way to keep everyone’s stake fair?
Hello, your article was exactlt what i was looking for, wondering… i have a construction material production idea. In our market (i mean whole country wide) there is any other producer, every same products are imported from two neighbour countries. And yet the market estimate is 38mln USD. I already did all the research and feasability study an much more. Anyway next week i am going to pitch to my two target investors. One is my brother in law, other is my current boss? How should i do my pitch?
thank you. My name is Mark. I found your content recently and it has been helpful. Would you be against pointing me towards How to actually write up the equity share deal with my investors? The legal papers. I am on a tight budget so I do not want to pay for lawyers. Is am in the fortunate position of my first investors wanting me to present the papers to them, rather than the other way around. thank you for your great content and your time. Mark
I’ve worked on a startup for three years. Mostly pre-revenue, pipeline of decent contract opportunities, new patentable technology invented (now on third generation). I’m an inventor/engineer. A much more senior person is interested in being CEO and help raise via original connections. His competence is nicely complementary to mine. Wants 1/3 pre-seed. What’s your advice on this?
As a founder (1 of 2), 80% of the business to start. Is to be expected that after rounds 1 and 2, I am the only shareholder who’s equity would be diluted or would it be fair to say that other shareholders equity would dilute over time as well? If the latter, how do you go about those conversations if they (The team and other co-founder) have been the driving force behind the growth of the business?
So what should the final distribution look like after all rounds have been funded? Will those employees still have one to 2% and the advisor still have half a percent? Is it only the founders pretty much who get diluted? What share should I as the number one owner still have? I have one other founder but I am primary
In the camera view your off to the left which led me to believe that you were going to have some sort of infographics to the right while you were speaking even something as simple as showing the percentage that you’re talking about why you say it would have been helpful. Aside from that great article and thanks for the information
Great article thanks! I’m in a predicament here: Partner A has built audience of 23,000 followers over 5 years, and is starting a staffing agency. Will be busy with company #1 around 50-60 hours a week. Investing initial capital to startup (paying partner B salary of 50K, and buying website/CRM software). Partner B will be developing business from scratch using that audience, his B2B sales experience (good track record), and putting in 70 hours a week. Already has been for months on company #1. Will be responsible for learning industry, making sales process, and day to day operations of getting revenue. Question is: What % of company should each partner get here? Partner A will be very busy, but investing capital and giving his audience info for leverage. B will be doing lots of work here to develop it.
My brother built a partnership in Coffe roasting to global Market in Ethiopia. He wanted me to be part of the business but the share holder wants me just a team who owns one of the roasting facilities here in Us. I was confused what percentage I must ask to promote the business here and do the logistic. Back home, the partnership agreements are vague so the discussion is awkward and not clear cut.
Hi Dan Martell, i am working on my startup, team consist of 3 people and we are ready with our beta version of the product. Right now we thought of incorporating the company, since all the 2 people work as a part time on the product. how much equity should i need to give them. or should i need to ask them to deposit some money give the equity. or should i incorporate company once i get the little customer traction, revenue in the company and my friend is ready put some money in the company. i am confused i dono what to do now… Please help me.
Hi Mr Dan good day. Please answer this.There is a company that I am building, so one of my customers approached me couple of days ago and says he wants to come in into the business with some money as a part owner of the company. If at all I’m accepting his offer,what is the best percentage of equity that should be given to him?
Hi dan, we are on start up stage of restaurant company Considering Equity >Founder me: (invest 1million + creator of company, brand, concepts & 100% managing the business, CEO) 24% equity? >Co founder: (invest 1 million + provides big market influence & Marketing) 22% equity? >1st investor (invest 5 million + provides start up office & resources). I consider giving 20% ? >2nd investor (invest 2.5 Million each + provides big market influence) I consider giving 10%.? >3rd investor (invest 2.5 Million each) I consider giving 10%.? >4th investor (invest 1.5 Million each + business consultancy) I consider giving 7% ? >5th investor (invest 1.5 Million each) I consider giving 7% ? After confirming the 5 years ROI, the amount is not too attractive. My 1st question is; can i give the Equity % that I consider, and then give them more of my profits in cash to keep the major % of the equity?? 2nd question, what’s better equity % to give base on the investment & other stuff they provide?? Please let me know, and wish you millions of subscribers because there’s lots of information & knowledge that people can learn from you!
Informative article. I would like to ask a question here, what happens when a co-founder quits or isn’t contributing as other? Do they keep their share life long? How do other founders benefit from the equity share they retain? Because if we call for dividends the co-founder who left benefits from it so how do we resolve this problem?
Thanks Dan, for such a precise and crisp article. How equity is split when we go for 2nd round of funding? Say 1st round I raised $1M, so Co-founders will get $6L. In the second round, if I get say $50M, then how we split equity? Is it only founders equity is diluted? or all others like team, advisor and seed level investors equity is also diluted?
Hi Dan, just your opinion, I want to offer a Sales Manager a lower Salary at the beginning with Decent cash payment at the end of the first year if we hit our targets, Alternatively the Sales manager can have Stock option instead of cash. But because those figures are so crucial for all things, most importantly the Angel investor, and being able to ease us into the series one for our 2nd batch of investment – I’m now thinking I should give both, but that seems mighty generous, just checking if this is overly generous or the norm, any advice would be helpful
Hi thanks for this article. I have a startup business and an investor is really interested in my business. He can actually provide almost 80% of capital I need to grow my business. Can you give me the best share of equity?I still don’t have enough knowledge for this that’s why I still didn’t accept his offer.
Hi.. I started a company and ran it for 1 year. after that one of the guy joined in. He helps me in various things like website, strategies, he is more of an adviser. He spent 3 months with me working out on different busines models and stuff but now he wants to have some paper work ready for equity sharing. I am not sure how much equity I should be giving to him..please advise.
Thank you, Dan! I am starting a small company – fully funded by me, but it will operated in different market where I have the business associate/friend, I been doing lots of work together (I trust him). I would run the company remotely, but most of the field work would be done by him. Would it be fair to give him equity of only 20%, but then give him more revenue share (e.g. 50%) to incentivize his operation? Much appreciate your advice.
What if an idea for a mobile app was conceived by two guys and another guy (investor) puts in 3k, only for the entire project to die 1 year later. Now both of the original idea guys want to revive it, put up whatever money it takes and bring it to life. These guys does not want to leave the original investor out after his initial investment of 3k even though the code purchased from the original investment can no longer be used. So now how should this be structured for the two idea guys (now self investing) and the 1 original investor?
May be a stupid question, I’m launching a clothing line. I don’t have the money to launch the startup just yet (legal name, sample products, website) estimates maybe 1G. I have a guy who wants to invest to help me launch. He wants 50/50 for it. Obviously I’m not going to give him half. He doesn’t bring much value besides his money and the ability to create a website and his network a bit. I have the social media following, my idea, I’m supplying the content and advertising. I was thinking 25% would be sufficient. What would be your thoughts.
Hi, I have a question. Let’s say I gave 20% for my 1st investor. Will the equity for the next investment round be split taking in consideration the 1st investor’s share or will it be deducted only from the founders’ remaining share? In other words, will the 1st investor keep his/her 20% after the next round? Thanks in advance.
hey Dan!! Bro. I have a business idea which would generate large money in years time.. But I have no money to invest… Its still an idea.. I went to an uncle of mine.. I explained the concept and everything.. He is ready to invest 3k $ for this idea.. I’m from India, in India 3000$ are large amount to invest in business idea… Now the question is how much equity should I offer and as initially my self being the CEO of the company should I draw some salary out of it…. If YES.. how much it should be… please help me out… thanks..
Hi Dan, amazingly simple explanation. Its very helpful. I have been offered a Partnership in existing business due to my industry expertise and network. I may get a fixed salary for existing business and profit share in the new business firm will generate. There are other new Partners also joining on the same terms. I fear that only one of existing Partner and me is likely to bring in new business, other new Partners may just execute the work. Whether its a good idea to negotiate the profit sharing ratio based on the revenue each Partner brings in for 70% of profits? And balance 30% profit to be distributed equally as kind of variable salary for all partners?
HI DAN, great article! My product is in development and has not launched yet. There are only 2 members in team, me and programmer. Need funding 300K for basic needs and product development so i offered a VC 40% as equity share. Is that too much? I forgot to discuss about option pool for the team, can i count the option pool from my equity and investor’s when i already have the team later? Lets say 10% option pool is taken from my 60% and 40% from investor. Need your advice! Thanks in advance
Hi Dan great great article thanks very much for the info but I was wondering if you could share more information on actually how to divide equity between the founders, we have three, me I am the founder and the inventor and also an investor now the father of the idea then there is a project manager and a coder a developer how do you roughly go here thanks very much appreciate your help.
Very informative.. I am planning my start up, and one guy, who is technically sound want to get more into the business, I am wondering if I should offer him equity or hire him as technical consultant? Though I have offered my complete website development task to a company but I need this person just to guide me at technical front from time to time. Please suggest.
Hi Dan. I’ve a Q. It might be hard, but you worth the challenge. Say you have an early stage venture whose current value is x, but is expected to grow y for the next year. You receive an investment z to boost the venture. How much equity should you give to the investor for the z investment? To whom this decision belong to? Regards
Hi Dan, Great vid. I found an investor who is willing to cover all business expenses for 50% equity. I also have a friend who is an expert at starting up businesses to consult me. I don’t have money to pay him and he says that he is in it for the long-run. He is literally going to hold my hand through the entire process of building this business. Do you have advice as to how he should get reimbursed when the company makes money? How much equity should I offer him? Thanks for your time and for the vid!
Im thinking of negotiating 15% equity for an initial $50,000 investment for a restaurant concept startup. We need $250,000 to get off the ground. I’m struggling to figure out if that is too low or too high of a percentage, and I keep going back and fourth. I still need to find more investors too, so I don’t want to give up too much just for $50k. Thanks!
Hi Dan. I work for a company that has established itself by innovating a new product to the construction market by safety through innovation and now has 11 branches throughout Australia. I have come up with an innovation product for the construction sector that will serve a big issue at hand worldwide that is only going to get dramatically worse in the near future. I would love to try partner up with the company I work for as they have already walked the path that I would need to trek down if I was to do it on my own (saving with time/management efficiency and resources ) The thing is I have no capital but have a friend that is willing to invest up to 500k. 🔵 would it be smart for me to take the 500k and try partner up with the company I work for so I don’t go to the table with nothing OR 🔵Would you recommend I just try to get the company I work for to invest if they are interested? And how would % workout for both scenarios? Sorry for long message, it just gets confusing for me sometimes to figure out the best direction to take when you are trying to sail in uncharted seas. I really hope you can reply. Thank you Dan!
I AM STARTING A START UP NEXT MONTH BUT I HAVE VERY LESS KNOWLEADGE REGARDING EQUITY……I HAVE AN INVESTOR WHO IS GIVING ME AN INVESTMENT IN RETURN OF EQUITY……SO I WOULD LIKE TO KNOW WHAT ACTUALLY EQUITY STANDS FOR …DOES IT GIVES THE OWNERSHIP STAKES TO THE INVESTOR AND INCLUDE THEM IN BOARD OF DIRECTORS??? PLZ REPLY ASAP
Hey Dan, I’m about to start a digital signage business. I will be advertising local business through my platform (mainly gas stations). I’ve already 100 plus gas station to put the digital signage for advertisement. I’ve met some of the investors. Some of the investors want to do a partnership. I’m not quite sure on how much % to give if they go on to a partnership.