Talking money for money with a potential investor

Steve — Tue, 02 Mar 2010 04:36:09 +0000

Money for money? An investor is going to put money (or something else in your company) and then get money (or something else out). People start throwing around fancy terms like stock, warrants, debentures, etc. Okay, maybe some of those terms are not that fancy, but I like to keep it simple.

What can the investor give you?

What can you give the investor in return?

It boils down to this:
1. What and when do they pay in?
-cash
-effort
-stock in something else
-preferred pricing
-goods & services from another company free or at preferential pricing

2. What do they get for it?
- stock
- sell at IPO
- sell earlier
- when do they get the stock
- can they sell the stock back to the company
- can they buy more stock (warrants)
- preferred pricing on product
- cash out
- other rights

As a reminder, it boils down to these basics. Before you get too fancy, find out what they can provide and what they want! They means investor.

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Talking money for money with a potential investor