I wish to seed my new business with about $120k, of which I need to raise about $90k.
I prefer not to go professional seed investors as:
(a) it could take some time (which I don't have); (b) it may be a problem down the line with new investors if the original ones don't stay; (c) i have a network of business associates that would each be willing to part with small amounts (say, parcels of $3k-$5k)
I heard a rule of thumb that says equity could be split as 50% to the workers and 50% to those providing funds. Using this rule, raising $90k and providing $30k would leave my associates with 37.5% of the company - or 1.25% for every $3k put in. Does this sound right, or is this too high?
Similarly, what sort of vehicle (terms) would you typically use for such a transaction and how do you address the risk of investor dilution for future funding rounds?