Seeds of doubt regarding capital pitches for equity

11 Replies

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. 

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.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you