Someone wants half of my company and provide guidance ...
Hi guys. So I'm currently working on a start up. I met someone through networking who happens to be an institutional investor and has an extensive background in high finance. They have experience with building and scaling successful businesses.
They like my business idea and want to invest in me... but not financially. They say they want to invest their guidance and experience... It's all very vague. And in exchange, they want a little under half of my company.
So now I'm unsure. On one hand, I'm totally unexperienced - this is my first entrepreneurial venture and some guidance from someone who is so experienced will be beneficial, but I'm not sure if it's the kind of guidance I need.
Not investing financially. Doesn’t know anything about your industry.
That’s called an advisor. They usually get 1-5%.
It seems like you have already reached the most optimal decision. Giving away nearly half of your equity is a serious step and it should be done in return for either for funding or actual expertise. If you need help with business development, marketing, etc. better look into startup accelerators. Most of them are specialized in one or several industries and take either a flat fee or a small equity share( I know that the accelerator where I work takes about 5% equity). So they help you with industry knowledge, market acquisition, product optimization, fundraising, sales, etc. and you stay in full control of your startup.
Smells like someone noticed you're inexperienced and wants an easy piece of the pie.
In this stage, gut feeling is essential as well and you should only hook up with people who have been there and walked in the same field... Not an outsider of the niche.
Question asked by
July 3, 2020 at 1:28:14 PM