Start up company new here. Advice needed

[HomeStart]

Hello everyone. ROI advice needed for my start up comany. Basic info. We are a start up custom home company. Investor is putting $100k into our business. He wants 3X on his initial $100k plus 20% of net profits for three years.....sounds high to me.... I've seen some posts on here about a max of 60% return and I'm assuming that's averall, NOT after a 3X on initial investment?

[GraphicSwarm]

Sounds like a cut-throat rate to me. 300% PLUS 20% of your net profits? Over 3 years? Is your credit that bad?

[rogercbryan]

Can you get cheaper financing? If not then this deal is amazing... its more relative to your situation then it is to the general market. Some people can borrow $100K on a 5% note based on credit and experience. Is the rate you are being offered ridiculous (yes) but if you have no better offers what can you do about it?

On another note... I've never seen a business that can produce like that in order to pay back the debt. Your bound to fail in a situation like this. You would be better off selling 49% of the company to this investor and then taking the money on a note paying 10% over 24-36 months. You'd also want to write in a buy back option allowing you to repurchase part of the company that you sold to him/her at a predetermined rate once their initial investment is paid back. Say 24% at 1:1 sales or 7:1 NET. This will give the investor the opportunity to make the kind of money they want but only if the company is successful. The way you are structuring the deal now sounds like the only thing considered is the investors money and not your business.

I'm not a lawyer and this is not legal advice. I can as a hired consultant help you write this deal if you are interested.

[HomeStart]

His stance is that his other "No-Asset" investments have the possiblity of a 10X return. He's "Capping" us at 3X...

[rogercbryan]

He's full of BS is what he is... Show me anyone making 1000% returns on their investments... just one person... even 300%... its garbage complete and utter garbage!!!