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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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[–] Rooflife1@alien.top 1 points 11 months ago

There is a lot of good advice here but also a lot of guesswork.

You need to get a clearer idea of what he is offering. What you have now is a messy high-level concept that a lot of people have interpreted.

From my read, this could be a simple offer of $30k for 5% of the business and hence 5% of any dividends. This would seem to be a terrible deal for the investor and I doubt that is the offer.

It could also be equity with a royalty (which sounds like a bad deal for you), equity with a profit share (which could be ok in some cases) or a preferred share structure.

I think you need to:

understand the meaning of equity and debt and understand the differences between revenue, profit and dividends.
get him to write out the idea in at least one paragraph or 3-5 bullet points
post here again