Angel investment
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Anonymous
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If you invested 20k in a good friend, a sure bet..
What would you want for your return? (Percentage wise) What timetable would you look for? Thanks! |
Anonymous
| I definitely would not do this, unless you want to lose all the money and the friendship. |
Anonymous
| Not how it works. You make a portfolio of investments and expect most to fail. |
Anonymous
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Nothing is a sure bet.
I would want more than 5% and less than a bank would charge her. And I would only give money I would be ok losing. |
Anonymous
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I can’t think of one reason to invest in a good friend. Loans complicate things and there is no sure thing.
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Anonymous
| I'd leave it up to them based on how much they made using my $20k. |
Anonymous
| Angel investors (equity at least) want returns in the 5-10x range. They aren't venture capitalists and want outsized returns to make up for the multiple losses. |
Anonymous
| You don't sound like you're ready for angel tbh. |
Anonymous
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Ok if the agreement is seeking 5-10% return, what about the time table.
Something happening quarterly? Quarterly % of revenue or profit? Until Invesment + 10% return is reached? What would you agree to? -OP |
Anonymous
| 5-10% for angel? Weird. |
Anonymous
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5-10% is way too low. The current risk-free rate is just below 4% (3.94% to be exact). That's guaranteed return, zero risk. As you move up the risk-return scale, "early startup" is just about as risky as you can get. You'd be expecting 5-10x average return at exit.
You can do it as debt but then that's restriting the comapnhy's cashflow when they need it most, with debt service. Or convertible debt, with a balloon payment, and equity upside. Or straight equity, with more paperwork, depending ont eh financial structure (a K-1 for you each year). |
Anonymous
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Ok, I see now 5-10X
Not 5-10% Got it |
Anonymous
I expect him to show documentaion of 10%/month for at least a year or two until he cuts off all contact and absconds. |
Anonymous
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This isn't how actual angel investment works.
I worked for an angel fund. Unless you do debt, with a stated return and terms that say you sre made whole in subsequent rounds, what happens is either the startup goes bust and your stock is worthless, they are living dead begging you for more just to get over the hump...repeatedly...or They are successful and can get venture investment Round A in which case your stock % is hammered down to nothing unless you can invest your pro rata share at the new evaluation...and again in Round B... Or they are acquired and that can be ok because you get your shares bought hopefully preferred shares, at some profit. If it's something like an up and running business like a dry cleaner or lawn service or something with actual revenues, your "angel investment" is either a loan with specified terms of repayment with interest OR you are buying a % of the firm and a % of the profits. But why do they want your money? Expansion or to keep from going under? |
Anonymous
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No equity/debt/ questions asked: 2% interest paid each week; principle can only be paid in full with an interest payment to end the loan.
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