For the past 2 months, I’m working on something that’s yet to monetize but I plan to spend money on it for at least a year and wait. I have another project, however, that I want to start. This requires money (not a lot at first, but it does – and i’m out of cash right now). I know someone I trust who’s willing to give me that money so I can get it started but I don’t know what kind of stake I should offer them. Say, we both invest $500 each right now and I’m the only one who works. Also, say I put in more cash in the months to come? I’d say something like 33% for the effort and the other 67% divided in the ratio of money invested?
Questions
What’s the worth of effort?
7 answers from the community
A· Mar 13, 2015
Heck no. Instead offer to pay back 2x or 3x the money if your project ends up making some money, and nothing if the project is a dud.
However, your real problem is that you're so broke that you're even willing to entertain the idea of a $500 investment. You need an emergency fund, and you need one now.
A· Mar 13, 2015
OP: well $500 was just an example :| Sorry, my bad.
A· Mar 13, 2015
Slap out a corporation and take a convertible note.
A· Mar 14, 2015
2 months? try 2 years.
A· Mar 14, 2015
Come up with a valuation based in common valuations of concept stage companies and tell your friend what his money will get percent wise.
Have him laugh his ass off.
Follow first commenters advice and promise him a multiple when the company is able to pay.
A· Mar 14, 2015
How about you offer him equity in the form of convertible debt with a 20% discount. Thats pretty standard for seed rounds.
A· Mar 15, 2015
What’s the worth of effort? Simple, come a monetary agreement when everyone understands this: Value has a value only if its value is valued.