How are you compensating your investors?

searcher profile

August 06, 2024

by a searcher from Georgia State University in Chicago, IL, USA

Hi Everyone,

I recently began my search and have come across some great prospects which I want to move forward on. Only issue - I can't put up the full down payment for some of the ones I like. Now, luckily, I do have some close family friends who are willing to invest with me on my next venture, but Im trying to figure out how to compensate them for it accordingly.

My question is -

How much equity are you offering to investors based on their capital investment? Is it 1:1?
What is the payback structure regarding them recouping their investment?

Thank you all for your assistance!

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commentor profile
Reply by a searcher
from Stanford University in Napa, CA, USA
I'd recommend reading the Stanford Search Fund Primer and looking specifically into the sections on Investor Capital and structuring of the fund/acquisition. Lots of ideas and some info on standard/common terms in there. It is freely available on Stanford's website.
commentor profile
Reply by a searcher
from Harvard University in Toronto, ON, Canada
While business journals provide a guideline and searchfund investors are within the guidelines, however in the end it will be what the investors will direct you to do it if they are not experienced searchfund investors. So chose your battle accordingly.
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