Looking for some investment (start up) advice

Discussion in 'Community Discussion' started by Daringescape, Feb 23, 2009.

  1. Daringescape macrumors regular

    May 7, 2003

    I was wondering of anyone here knows and can give an example of the way a typical investment agreement works? Say I have some money I want to invest in a startup company. What are the typical terms of getting my money back?

  2. Sun Baked macrumors G5

    Sun Baked

    May 19, 2002
    A typical agreement that issues some stock in the company for the first tier financing.

    Or a loan backed by preferred shares in the company that can be traded for a super majority in case of loan default, or a set percentage/shares of the company depending on future key points set now.

    Can set the shares now in case of future loan for stock, and then use a dilution rider to allow the investor to buy shares for cheap to keep their percentage the same.

    Typically, you want a loan that gives you shares now, is backed by preferred shares and a seat on the board, and pays you your money back in the future with a set multiple depending on how the company does or if it sells.


    All depends on where you are in line, and how much you are willing to contribute. If you give the first 250k, you can extract a painful amount for setting the company into motion.

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