From Singapore - Advice needed on potential angel investor's qn

[sheikh79]

Hi guys,

A quick intro: Me from Singapore and starting up (or looking for seed capital) a F&B outlet here in Singapore.

I was pitching my business plan to a local (a friend of a friend) private investor. He liked it. Well, basically he liked the synergy of the management team, as it is true what they say, an investor invests in the person first before the product/services. (of course the idea has to be good in the first place)

Anyways, when it comes down to the topic on equity financing, here is where i got stuck. Since we are going to the Equity funding route as oppose to debt financing, an investor will naturally have % shares in the new limited liability company.

I have little understanding in this matter. And since I am looking for SGD200,000 as the initial seed, he wants to know how much % of the company will a potential investor have.

It was fortunate that our meeting had to end quite abruptly, as he had to rush to another meeting and we are meeting on 2-3 days, which gives me enough time to research and ask around for a "standard" or "norm" in this matter.

There is a formula i guess floating around in terms of expected future valuation of the company to be used to arrive at the fair % figures. But since this investment is at a seed stage, what best angle should i approach this issue?

side note: if any is interested in a F&B venture with growth potential and an innovative concept and would like to have a detailed look at my idea (business plan), you can PM me with your email address. [preferably someone from the South East Asia region, or if you are over the continent, preferably one whom is serious and sincere and willing to travel to close.]

[RobertJames]

Your best approach is to decide what % you are prepared to give in equity. The investor will look at the risk and amount of investment and may either agree the % you want to give away or will ask for more if they feel that the investment risk is woth a higher %. Some investors will ask for a larger % but may reduce the equity % if you meet the targets you forcast. In reality no matter what % you want to give it will always be the investor that sets the bar and it will be down to you to negotiate or decline the offer.

[mikelebus]

Although it doesn’t give you a formula, you can find an article on this by Googling "How to Determine Seed Round Valuation".

Also, if you’re looking for funding, you should try the Singapore Investment Network, who have a large network of private investors and business angels.

Best wishes,

Mike