New answers tagged investment
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Imagine this scenario: 10 years from now, you're working on getting funding for your 3rd startup and the VC asks you where you went to school. It just so happens that the cousin of his brother-in-law knows the neighbor of a professor there. So the VC sends a quick Linkedin message and asks about you. Now suppose the professor says "oh yeah, we remember him: ...
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Would you take $100,000 for 10%? Many pre-revenue start-ups would and there are several incubators that provide funding in that range. Doesn't sound like a bad deal providing the terms aren't too onerous.
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pay the fees for drafting the agreements
Hmmm ... the most common form I've seen is each party bears their own legal expenses. So the kindest interpretation is that if you want to change it, you carry the can.
use a legal firm of the investor's choosing
Now this is what we call tying (competition law 101). The nasty interpretation is that the ...
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You got $10k. Not $1. They are taking a big risk. There is a time limit so I don't see the problem.
You can walk away from it - that's your choice.
Worst case scenario for you is that you have to give up 1% of your company after it is worth billions.
Is that a bad scenario?
Keep taking a 0 off the end of the valuation. Are there ANY scenarios ...
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That sort of arrangement is actually pretty typical from universities, but it usually happens in licensing deals: "We give you this technology, and you give us an undiluted 2% of your company until X happens." And, 'X' is usually something like the passage of time, an equity round of $5M or more, etc....
It's not that onerous if it's 1% of the common (or ...
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I think the 20% money back for 5% equity is quite fair in this situation. Basically, you buy back 85% of his equity for 20% of his initial investment. If you're unable to give him back the 100% of hist investment for 100% of his equity - that's the next best thing, and it is a very generous and fair offer on his behalf.
It doesn't sound like you expect him ...
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is demanding that everything be split 50/50 from the very first check we get. Which goes against his written agreement.
The usual rule of thumb is that reward should match risk. The issue is the division between equity (dividends from profits after expenses) and operations (salary/expenses). There are 2 ways of negotiating
positional - ie only ...
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