[slinky]

Hello all, My name is Jason. I am new to this site and so i wanted to introduce myself.

I am planning on having a sports website developed that is quit unique to online sports sites. We hope to begin development very soon... a few weeks. Everyone is ready to go... I have at least 2 investors on board and maybe a 3rd (a moderately famous movie writer). The 1st 2 investors have promised $100,000 combined, but they are looking for about 25% of the company each... are they asking for too much?

it is going to cost about $40,000 to build the site and about $60k for other expenses... we figured $100,000 should keep us running for around 10 months.

i am very new to this whole thing and could use some advice...

I have only talked to 3 investors and they all love the idea and want to be a part of it and i am sure i can get more investors if i want to.

[bps092]

Yikes, sounds like another case of someone paying too much for technology. 40k for a dynamic website? What kind of stuff does it include? I hear these horror clients all the time from clients that come to us after being quoted for $80k for something we will do for under 4k. As far as investors go, what are their terms? Do they want 25% each for ever or for a specified amount of time? Welcome to YE!

[slinky]

actually, to develop the infrastructure of the site will cost about $27k and we have around $10k in flash/media development and logo design...

if you knew the plans for the site then you would understand why it costs so much and why everyone wants in on it... but i can not tell ya what its about...

and the investors are permantent...

i am a web designer actually, but i am not going to be doind much if any at all of the design work.. too busy doing business development.

[Brian Watkins]

If you are expecting the company to really fly then I would never give up 50% for $100,000, assuming that they get the 50% equity forever. But giving up 50% for a certain amount of time might be alright. I might have the agreement be something like they give you $100k and you give them $300k back in 3 years and if they want security then secure the loan with a percent of the business where if you don't pay them back in the time period they take over that percent of the company "without any control of the business" until they receive X amount of the "net profits" from that equity, and you would have the option to pay the X amount to buy out that equity from them at any time. This makes it so if your business really becomes profitable then you don't lose out a lot to them and if it doesn't do well you stay in control still and they only get equity for a period of time.

Good luck!


Brian Watkins

[Karen]

Ok, I have to ask...

Why are you willing to pay that much for a website?

Business is expensive, expecially for the first few years. Why dump so much into the design? Wouldn't the money best spent elsewhere?

Karen

[GSchubert751]

It seems like your spending WAYYY too much money on your website. Also I would never give up 50% you are giving up 50% control also. Who is going to run the business on a day to day basis. You could Initially issue stock or bonds to your Two VC and then buy and keep 60% of the stock for yourself so that you have control over your company.

[webheadsinc]

Not to shoot you down, but $40,000 is way to much for a website. Save your money and don't waste anyone elses. Scrap this idea. The odd's of your website making back the $40,000 grand is slim to none.

[GSchubert751]

what webheadsinc just said is something that you need to take into consideration also. At the most i would never spend more than 5k on a really detailed and nice flash site. I think what Jason really wants to know is how to equally divide up the company among Investors / Employees.

[webheadsinc]

If you have 2 people willing to invest $100,000.00 i'd let them own half of the company and share the profits with you. My main question is where do people find these investors? I wish I could get my hands on about $20,000, I could easily double that money in a few months.

[problematic]

I got a teriffic web site including;forms, links pages, hosting, and about 40 pages of copy plus flash for $700.

Remember a web site is nothing more than a business card in the closet. All the money you are spending on site development should go to SEO development to get it out of the closet. Even that will not take $40K if you look around some for the right price. SEO development will take at least/no less than 4 months.

50% of your company isn't a good idea. 50% of the profits for a limited time to repay investors would be better all the way around. For example...what if you need more money, you could wind up with zipo if more investors/money is needed. How could that happen you ask? hummm, simple (it happened to me once), the majority stock holders vote you out.

[slinky]

Originally posted by Karen
Ok, I have to ask...

Why are you willing to pay that much for a website?

Business is expensive, expecially for the first few years. Why dump so much into the design? Wouldn't the money best spent elsewhere?

Karen

Karen, it is not a simple site design. there is a lot of custum built web applications... the business is the site, so that's where a huge chunk of the money is going.

[Brian Watkins]

It is very possible that the site he needs is worth that much. I have a web service idea that would cost over $250,000 probably to develop and it is definately worth it too!