Raising capital from friends and family on a deal by deal basis

searcher profile

December 10, 2020

by a searcher from Dartmouth College - Tuck School of Business at Dartmouth in Milwaukee, WI, USA

Running a self-funded search to invest in companies for the long-term. We plan to invest our own capital in addition to raising outside capital from family and friends. Our role would be more "operating partner" than day-to-day CEO. Does anyone have a resource that summarizes the various structure options (for investors and searchers) to utilize when putting a deal together?

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commentor profile
Reply by an investor
from University of California, Berkeley in San Francisco Bay Area, CA, USA
It would likely not be much different from any other self-funded deal.. You would typically offer the investor a preferred return (8-12%) plus a percentage participation in the upside (typically 30-80%). If you are not the CEO, then your participation would be reduced by what the CEO gets.
commentor profile
Reply by an investor
from Columbia University in Denver, CO, USA
You could structure this as a fund that has a management agreement with the operating team.
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