Thread: stucturing ownership?

I am considering starting a brick and mortar retail project but I want to use OPM and am willing to give up some ownership in the company rather than just borrow all the money and do it on my own. Because it is my idea and my concept which I believe is franchiseable, I want to obviously retain a majority stake in it. I am looking for some ideas in how I would structure this if I were to say bring in 8-10 i nvestors so that it was attractive to them but yet I still have a lot of control. Any thoughts? The whole thing would be less than $100,000 total investment.

To answer this effectively, we'd need to know some more, like how much capital you are putting in, what kind of percentage of equity the investors will have, what your experience is, what role you'll be doing, what kind of skills you'll be bringing to the business, who else is on your team, and what kind of returns you're expecting (and the risks to those returns). If I was investing in such a venture, these are some of the most immediate things I'd want to know.

Equity is a very expensive way of financing business. Have you considered just getting a loan, or is the reason that you're using equity finance that the risk is too large for you to assume yourself?

Daniel

Originally Posted by australianinvestor

To answer this effectively, we'd need to know some more, like how much capital you are putting in, what kind of percentage of equity the investors will have, what your experience is, what role you'll be doing, what kind of skills you'll be bringing to the business, who else is on your team, and what kind of returns you're expecting (and the risks to those returns). If I was investing in such a venture, these are some of the most immediate things I'd want to know.

Equity is a very expensive way of financing business. Have you considered just getting a loan, or is the reason that you're using equity finance that the risk is too large for you to assume yourself?

Daniel

I plan on putting the same amount of capital as the other investors, and I have all the skills necessary and capital for that matter to do it on my own. I just dont want to do it all on my own, but I feel that since it is my idea and basic blueprint I should have a higher stake in it than just someone putting in cash. It is something I feel could be profitable I just am not passionate about it and would rather find someone else who is who would want to run it from an operational standpoint with me as more of a consultant and primary equity holder. I want to be involved just not too deeplu involved but still want to have control over something I basically created.

Have you got a proven concept? With a proven concept you can raise more money and still retain a lot of the capital structure (and voting rights).

Investors often like to see if the idea is comercially viable before investing money. Even start-up investors would like to see if it is viable commercially. If you can show that and then show who will run the company (and prove why the manager is viable to run it), then you are on more solid ground.

My solid advice to you. Everything will be easier to pull of from this standpoint. You just let the facts argue for you (the best sales tactic to be honest).

Sounds like you need an LLC -- your investors would be divided into 2 groups, non-voting, and voting. I imagine most members would be voting but smaller investors can be added in as non-voting.

The organization and rights of each member would be spelled out in an LLC Operating agreement which can be 100 pages long.