User Power
Value/Post Ratio
185%
- Jul 20, 2014
- 397
- 735
- 33
Option 1: Invest xxx,xxx and see x,xxx,xxx return, with no control over whether the right decisions are being made
Option 2: Invest xxx,xxx and see x,xxx,xxx return and be in full control over your vehicle.
Your opportunity cost for investing in your friend's company is potentially millions of dollars NOT earned in your own venture.
Your opportunity cost for investing in your own venture is potentially millions of dollars NOT earned investing in your friend's company.
You're positioned to win millions either way. You could make the argument that because you have more control in your own venture, your risk of loss is mitigated (i.e. you trust yourself more than you trust your friend to make the right decisions). You could also argue that because you retain 100% ownership in your venture (I'm assuming), your long-term potential for gain is greater.
Based on those inputs, your decision was correct. The variable is the likelihood (and magnitude) of success - is your friend more likely to succeed than you? You feel that no, he is not. Is his business likely to become larger than yours (i.e. your 40% stake in his > your 100% stake in your own)? You feel that no, it is not.
You're not crazy at all.
Option 2: Invest xxx,xxx and see x,xxx,xxx return and be in full control over your vehicle.
Your opportunity cost for investing in your friend's company is potentially millions of dollars NOT earned in your own venture.
Your opportunity cost for investing in your own venture is potentially millions of dollars NOT earned investing in your friend's company.
You're positioned to win millions either way. You could make the argument that because you have more control in your own venture, your risk of loss is mitigated (i.e. you trust yourself more than you trust your friend to make the right decisions). You could also argue that because you retain 100% ownership in your venture (I'm assuming), your long-term potential for gain is greater.
Based on those inputs, your decision was correct. The variable is the likelihood (and magnitude) of success - is your friend more likely to succeed than you? You feel that no, he is not. Is his business likely to become larger than yours (i.e. your 40% stake in his > your 100% stake in your own)? You feel that no, it is not.
You're not crazy at all.