A bigfish investor has approached our project with a deal that seems too good to be true. What risks are involved in granting the investor too much equity in the end product? Could there be an ulterior motive involved?
There is all types of ways to control things when setting up deals. You need to provide more contex on what terms are you agreeing on, just equity, same number of voting rights, etc?
Agreed, what other details can you supply on the situation? Do you have the seed capital to get the project accomplished yourself anyway, or are you desperate for the investment?
I would try, if possible, to avoid giving away equity at all costs. Worse case scenario, and speaking in generalities only, you could eventually get pushed out of your own investment, losing seed capital and all.
I am sure the bigfish investor got where he is today by smart investing. You never want to give away equity, but if it's the only option on the table and you are desperate for capital, you may wish to bite the bullet and plant the seeds of a new professional relationship by trading equity.
Sometimes trading equity for experience and a guarantee the sale will close efficiently is a worthwhile sacrifice. Just saying.
@Account Closed I am certainly willing to change my earlier answer after reading your post. I agree with your thoughts on this, the experience that a high level investor brings to the table can certainly be worth the difference.
I am currently gearing up for my first investment, and am using the services of a mentor I met in my local community. Seeing the level of value he brings to the table, I would certainly be willing to give away equity in exchange for expertise.
@Tyrel McAllister how is your first investment going? Any progress to speak of yet? Where are you planning to invest?
Yes, how did the deal go @Barbra Thebenyane ?
I plant seeds all the time! Seeds in my garden that is! Love them tomatoes!
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