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Had an offer for someone to invest $30,000 for a return of 5% (alien.top)

submitted 11 months ago by Nivsy_21@alien.top to c/entrepreneur@indiehackers.space

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Someone wanted to invest 30k into my landscape company for 5% return, now I’m not the smartest guy out there and someone is free to correct me if I’m wrong but shouldn’t that 5% be until the loan is paid off and not until I give the company up

Again I’m very new to this so I could be looking at this horribly wrong

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[–] afakevc@alien.top 1 points 11 months ago

If someone wants to buy 5% of your equity for $30,000 that means he/she is valuing your company at $600,000.

5% of $600,000 = $30,000

Buying equity is not a loan. You don't owe that money back. But you should have a conversation around if your new potential partner is expecting quarterly or annual distributions of profits generated.