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  1. Collapse Details
    Do I have to sell a business's equity to raise capital from investors?
    Hello!

    I know a skilled trade that is in demand in most cities. I have a marketing method that works for me well. I have been an entrepreneur of a small cleaning business (not the same as this business/trade) and I had minor success raising probably about fifteen thousand in about 5 months doing that by myself. I do not like the margin on that business, and I would not like to continue in that business. I have a new trade that is lucrative, relative to cleaning, and fairly in demand.

    So with this in mind I would like to start another business. This time I would like to raise money from investors, but I really don't want to give away much equity in the company. Is there simple investment agreements that return interest over time as opposed to equity?

    I also would like to operate within multiple states, this is a complication that I did not have to work with in my previous business. If anyone has even the simplest advice to begin my journey understanding the obstacles that may stand in my way when conducting interstate business, please do tell!

    Thank you if you have read this. I will read your reply, and I do look forward to your advice. Please let me know where you're coming from so that I can put your words into perspective!

    Have a great day!


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    thethispointer,

    To secure capital from investors and hold back their claim to the company is a difficult thing to do, however, it is possible. In this case you may want to negotiate other assets, maybe even personal assets as collateral for the capital loans, because, lets be honest, that is what they are if you aren't giving some sort of claim or ownership to the investor. Many business loans don't require a claim to the company's equity, especially if you operate as a sole proprietor or LLC, however, will still want a guarantee on repayment of some sort. If your assets or the business assets are up for collateral, then the equity is on the line, and they only have a claim to it as long as they are still owed. Once the loans are paid off, you are transferring the liability to equity as each payment is made. I hope this kind of dials in your perspective on financing, while also giving you some topics to take to the bank. Pure investment without any claim or repayment will be very difficult to land.

    Josh


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