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This might be a little long. Sorry if it is. I need help determining if I am being fair. A little history first. I have a patent for a quick change head, for a percussion drum. I have spent the last couple of years trying to get someone to manufacture it. I finally came across a few die casting companies who can make a good product, and it would be reasonably priced to the end user. The reason it has taken so long is I have been trying to avoid die casting, honestly. The initial tooling costs are high, and I wanted a cheaper start up cost. I tried sand casting, but the pieces were garbage. You cant machine from plate, because its too expensive. So I have finally reached a point where I really don't have much choice. If this is going to work, it will be with die casting. So, I came across an old friend, and we began talking about this project, and he was really interested in it. I told him I was in the process of getting together what was needed to start. I am in need of seed money, or angel investors. He was ready to help, to the tune of $15-20k. Wow, ok. Over the course of the last few weeks, I have been talking to him, and working to get all the information I need to really pursue some investors, or at least what I think I need. What it boils down too, is I need approximately $150,000 to do this. That would cover the first 1000 pcs and operate for the first year, after which I can take the profit, and buy more stock. That cost also includes trade shows expenses, advertising in trade magazines, and a lot of other expenses that I think we will encounter. Here is where the help comes in. I told him that for $15k, I would agree to 5% for 5 years. I would be flexible on the years, maybe up to 7, and I will repay the initial investment first, without taking a dime. He is wanting an indefinite amount of years, even passing it on to his 22 year old wife, and unborn child. And he talked to some friends of his who are business owners, who told him to get 15-50% in perpetuity. What? I arrived at my figure by offering the $150k as a 50% stake. Its the only way I know to do this. Without that amount, there is no stake. His $15k, would be 10% of that half, or 5% of the total. Am I being unreasonable? There is no way to do 15%. I would still need 9 other investors at the same rate. And that would be 150% (for all 10, at 15% for $15k each) the math doesn't work. He said he just wanted to make about 15 million and retire. Wow, really? Me too. But that would be a 1000% return. I can see a lot of money being made. I cant see me giving away 50% forever. There has to be a cutoff.
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