my partner and I are creating a start-up and I was wondering if anyone could give me some advice about negotiating with an angel investor. The start-up is a social networking website for pets. We have a full business plan and design of this concept, which we pitched to an angel investor today, and they are really interested. They are willing to give us $50,000+ with office space, resources, etc. for 50% of the company and if we reach a certain amount of users (3,100) by the 4th month they will dilute their shares to a locked 26.1% returning the 23.9% to us. (What is this called when they return a % of shares to us after a milestone?)
They also said they would bring us an additional $500,000 for 10% of the company after the 3rd month once we prove ourselves, but this is all an assumption, so we are not counting on this.
*Do you think this makes sense and is a good plan, or no? *We don't really want to give them the 50% to start; we would prefer (obviously) to just give them the 26.1%. Why do you think they want to do this? *We are planning to negotiate for $75,000 for 26.1% non-dilutable.
PLEASE let me know your thoughts.