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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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[–] TO_GOF@alien.top 1 points 11 months ago (14 children)

Going merely off of what you stated:

They want an equity stake in your company, you would own 95% and they would own 5%. They have also valued your company at $600,000. If you take their money you wouldn’t owe them anything but they would be part owner of your company though you would retain full control.

Do you believe your company is worth $600,000? Do you need the $30,000? If you feel your company isn’t worth $600,000 then this might be a good deal. If you need the $30,000 to help you expand then this might be a good deal.

If your company is worth more than $600,000 then it’s probably a bad deal and if you do not need the $30,000 for any reason then it is a bad deal.

[–] Responsible_Goat9170@alien.top 1 points 11 months ago (2 children)

Just to piggy back on your answer with another question. If he does sell 5% for 30k he has no obligation to buy it back, correct?

[–] TO_GOF@alien.top 1 points 11 months ago (1 children)

Usually, yes.

However there could be contingencies written into a contract which could require him to buy the stake back. That’s why anyone selling a stake in their business needs to have a lawyer review any contract they are presented with.

[–] Responsible_Goat9170@alien.top 1 points 11 months ago

That's what I was thinking. I had it as part of my question, but figured I'd keep it simple.

Thanks for the answer!

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