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I am aware there are plenty of questions here that address almost every aspect of the founder/investor relationship, but I'm not there yet. I'm still struggling with the basics. I've read through a whole lot of articles on the web. Yes, they talk about a wide variety of issues when dealing with investors, but it's not what I need. It's ridiculously difficult to find answer to the very first and the very basic question:

What do investors generally ask for when giving away money?

From a few articles and a few comments on the others I'm beginning to suspect it's the control of the startup company. Is it true? What is the thing called "equity" people are talking about?

Please be kind and help me understand the basic principle. I get money they get what?

(Wondering how it is possible that the entire web talks about the little details but not about the general idea behind...)

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1 Answer

up vote 1 down vote accepted

Investors generally want equity back for their investment of money in your business. Equity typically means a percentage ownership of your company.

The percentage wanted is usually relative to the amount of money they invest and the valuation of your company.

As for control of the company, if you keep 51% or more of your company then you retain control, but you will be accountable to your investors still (there will be stipulations to ensure you are).

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Are there any options to get financed but keep the 100% ownership? Like sharing profits (if any) but the company stays entirely mine? – fobo Nov 11 '11 at 19:04
Get a loan from a bank. – Joel Friedlaender Nov 12 '11 at 0:07

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