MBarnott
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- Joined
- Dec 4, 2019
- Messages
- 12
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Hi all,
I'm not sure if this is in the correct place because I couldn't find a better sub forum here that fit this type of post exactly. So I'm in the initial stages of getting a club started up between 4 other people and I am having a bit of a hard time figuring out how to do the company shares correctly. It's broken up as follows
Investor A: 50% of seed funding but no experience and wants to be a offsite silent partner
Investor B: 30% of seed funding has good legal and policy background but also wants to be mostly a silent partner and advise on occasion
Investor C: 10% of seed funding has working knowledge of all positions (cooking, bartending, security) and is willing to work sweat equity for 3-4 months
Investor D: 10% of seed funding (Myself) has all the operational knowledge and would be tasked with getting the entire thing setup and running. I have all the networking connections and experience opening clubs from scratch. Would be in charge of all HR, Bookkeeping, management duties. Also willing to do 3-4 months sweat equity.
My question is how you weight experience vs seed money in a situation like this? For example, if let's say for brevity that the total invested was $100,000. Would you try to figure out what an advisor rate would be to open a place like this say $20,000 and factor that into the company's net worth then split it on percentages? Under that situation it would break down to
Investor A: $50k for 41.5%
Investor B: $30k for 25%
Investor C: $10k for 8.5%
Investor D: $30k for 25%
Is that a rational way to try to break it down or should the rate of experience be weighted differently?
In another situation if the last two investors in the scenario above did 3 months of sweat equity work without pay to keep cost of operations low while business grows (Investor C @ $2500 a month and Investor D at $3000) would it be factored in like this?
Investor A: $50k for 36.5%
Investor B: $30k for 22%
Investor C: $17.5k ($7.5k sweat equity) for 13.5%
Investor D: $39k ($9k sweat equity + $20k operational experience and execution) for 28%
I'd love to hear your thoughts on this because I have found a lot of different answers on the subject. If you guys know any good articles that go over in detail about the experience vs liquid capital investment I'd love to read them!
Thanks!
I'm not sure if this is in the correct place because I couldn't find a better sub forum here that fit this type of post exactly. So I'm in the initial stages of getting a club started up between 4 other people and I am having a bit of a hard time figuring out how to do the company shares correctly. It's broken up as follows
Investor A: 50% of seed funding but no experience and wants to be a offsite silent partner
Investor B: 30% of seed funding has good legal and policy background but also wants to be mostly a silent partner and advise on occasion
Investor C: 10% of seed funding has working knowledge of all positions (cooking, bartending, security) and is willing to work sweat equity for 3-4 months
Investor D: 10% of seed funding (Myself) has all the operational knowledge and would be tasked with getting the entire thing setup and running. I have all the networking connections and experience opening clubs from scratch. Would be in charge of all HR, Bookkeeping, management duties. Also willing to do 3-4 months sweat equity.
My question is how you weight experience vs seed money in a situation like this? For example, if let's say for brevity that the total invested was $100,000. Would you try to figure out what an advisor rate would be to open a place like this say $20,000 and factor that into the company's net worth then split it on percentages? Under that situation it would break down to
Investor A: $50k for 41.5%
Investor B: $30k for 25%
Investor C: $10k for 8.5%
Investor D: $30k for 25%
Is that a rational way to try to break it down or should the rate of experience be weighted differently?
In another situation if the last two investors in the scenario above did 3 months of sweat equity work without pay to keep cost of operations low while business grows (Investor C @ $2500 a month and Investor D at $3000) would it be factored in like this?
Investor A: $50k for 36.5%
Investor B: $30k for 22%
Investor C: $17.5k ($7.5k sweat equity) for 13.5%
Investor D: $39k ($9k sweat equity + $20k operational experience and execution) for 28%
I'd love to hear your thoughts on this because I have found a lot of different answers on the subject. If you guys know any good articles that go over in detail about the experience vs liquid capital investment I'd love to read them!
Thanks!
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