Investors & Ownership Questions

[mbacchus]

Hello,

I did not want to do this, but it looks like I will have to give investors a percentage of my company. My question is, what percentage do you give investors? Is there a scale for this? If I need an investor to give $8,000.00, what percentage of the company should I give them?

Thanks

[Pwdrin]

It will all depend on how much you will make a year, so they can find out how much they will get back. Say your making $80,000 a year. The investor gives you the $8,000. Giving him 10% he will get it back after the first year. If the $80,000 is all profit. So try for less, if the investor thinks he will get a good deal at 5%. Don't try too high. Too high and you can't get it lower. Try lower that what you expect just don't move it a huge step higher.

And also remember that your not just getting help, the investor wants more money, so giving a little bit more out and you could get much more than just a company. You will get a lot of help.

[mbacchus]

I see. So definitely start small... One other question: Do you think it's best to have their share in the company diluted after X number of years?

Thanks

[Pwdrin]

That would be good, but if that means after that they will just give up on help. Then it's up to you if it's worth it. They will have a lot of business ideas or they wouldn't be investors.

[Iamnotsatisfied]

Your looking for an investor and you don't know how much your company/ business is worth. Are you sure you know what you're doing?

[marcstep411]

Any experienced investor will want to calculate her or his return in terms of the percentage each year. What that percentage is will depend on the perceived risk in your business and how the investor will get the return (e.g., yearly dividends, sale of your business in, say, 5 years). For high risk, high growth businesses the expected annual return with be more than 100% (remember many business fail, so each success has to make up for the failures). The less risky the business is the lower the %return requirement. So once the investor figures out the return he or she wants based on your revenue/risk prospects, the percentage of your business he or she needs to own can be estimated. Bottom line there is no specific answer to your question without knowing all the details.

[mbacchus]

Did I say that I don't know how much my company is worth? No. This is a startup and I'm on a board seeking advice. Thanks

[rogercbryan]

Hello,

I did not want to do this, but it looks like I will have to give investors a percentage of my company. My question is, what percentage do you give investors? Is there a scale for this? If I need an investor to give $8,000.00, what percentage of the company should I give them?

Thanks

Go to Get a Personal Loan at a Great Rate! - Apply Online Today - Prosper and do a P2P Loan.. offer to pay 20% on your $8000 over 2-3 years. The amount of money you need is to little to even consider a partner just as an investor. Other then that try to get a loan or a credit card. You are heading in the wrong direction by looking for an investor.

[rogercbryan]

Any experienced investor will want to calculate her or his return in terms of the percentage each year. What that percentage is will depend on the perceived risk in your business and how the investor will get the return (e.g., yearly dividends, sale of your business in, say, 5 years). For high risk, high growth businesses the expected annual return with be more than 100% (remember many business fail, so each success has to make up for the failures). The less risky the business is the lower the %return requirement. So once the investor figures out the return he or she wants based on your revenue/risk prospects, the percentage of your business he or she needs to own can be estimated. Bottom line there is no specific answer to your question without knowing all the details.

Not completely wrong... but way off base for this situation.

[jasaunders]

Go to Get a Personal Loan at a Great Rate! - Apply Online Today - Prosper and do a P2P Loan.. offer to pay 20% on your $8000 over 2-3 years. The amount of money you need is to little to even consider a partner just as an investor. Other then that try to get a loan or a credit card. You are heading in the wrong direction by looking for an investor.

Prosper has been shut down for a couple months already, they aren't taking new loans. Probably a good thing, since about 75% of my portfolio is in default, collections or filed for bankruptcy.

[rogercbryan]

Prosper has been shut down for a couple months already, they aren't taking new loans. Probably a good thing, since about 75% of my portfolio is in default, collections or filed for bankruptcy.

Wow... I just logged on... didn't know they had shut down... my bad

[akula]

Prosper has been shut down for a couple months already, they aren't taking new loans. Probably a good thing, since about 75% of my portfolio is in default, collections or filed for bankruptcy.

wow, sorry to hear that
interesting development though...
i really thought this model could work