Advice on receiving investments
Hey guys and gals... since this site is around the topic of investments in technology I thought it the right place to ask.
I have an online project that is growing quite rapidly, and I've been approached by an investor who is interested in putting money into the idea to help me grow it.
On the outset, I am hesitant to take any money, but of course it would mean we could significantly increase our marketing and development budgets and efforts.
Does anyone have some advice on how I can accept the investment, and still retain 100% control of how the project evolves?
I do not want any operational involvement from the investor and I will show them my blueprint for the project and if they like it they can invest... or not.
Are there any specific documents (agreement contracts) I should source/create to get this to run smoothly?
Any and all advice appreciated.
I have an online project that is growing quite rapidly, and I've been approached by an investor who is interested in putting money into the idea to help me grow it.
On the outset, I am hesitant to take any money, but of course it would mean we could significantly increase our marketing and development budgets and efforts.
Does anyone have some advice on how I can accept the investment, and still retain 100% control of how the project evolves?
I do not want any operational involvement from the investor and I will show them my blueprint for the project and if they like it they can invest... or not.
Are there any specific documents (agreement contracts) I should source/create to get this to run smoothly?
Any and all advice appreciated.
Views: 2
Replies to This Discussion
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Permalink Reply by Tomas Van den Berckt on
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it all depends how what you need and what for. From the sounds of it, you might be better of with a loan than giving up equity.
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Permalink Reply by Ross Allchorn on
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I think you may be right. I wouldn't take a loan though... I would prefer to just grow it naturally and luckily I can due the nature of the project.
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Permalink Reply by Justin Stanford on -
Ross, there are many mechanisms used by investors. Institutional investors will typically want preference shares, which give them certain controls on some corporate actions of the business to protect their investment. I'd suggest you read this book to understand all the options.
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Permalink Reply by Justin Stanford on
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Another good link to read, particularly the part on why you perhaps don't want VC. Written by an entrepreneur turned VC:
http://www.bothsidesofthetable.com/pitching-a-vc/
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Permalink Reply by Christiaan Roesch on -
> Does anyone have some advice on how I can accept the investment, and still retain 100% control of how the project evolves?
-Have you asked them what they prefer?
-Can you offer them a bail-out plan?
-Sell a certain % of shares in your company with an agreement that you would like to buy it back once you are in a position to do so.
-Maybe offer them a profit share trust plan over a certain term (A – B years) - develop a mechanism which provides them with a % of company profit and dividends every year without them owning any shares in your company.
Base you numbers on the following:
1. Share % - in normal circumstances if you were to allocate them shares, what % would it represent of the company?
2. Based on Share % - how much in profit will they receive?
3. Based on Share % - how much in dividends will they receive?
4. Based on your assumptions, in which year would your investor/s have received their ROI?
Once they have received their return on the agreed term then the profit share trust plan can be scraped or they can reinvest if they are happy with the return and the growth of your business.
-Why don’t you ‘warehouse’ 30% of your company for investors only?
-How can you lessen their risks?
Talk to them! Find out what they want! If they approached you and are really serious then they will most probably be willing to negotiate!
>Are there any specific documents (agreement contracts) I should source/create to get this to run smoothly?
- Maybe it’ll be good to sign a mutual non-disclosure agreement (NCNDA). If you were to share your business case / ideas with them then you should try to at least protect yourself!
All just ideas!
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