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Hi Everyone,
I'm new to this forum and was just a bit curious about Angel Investments pay out. Let's just say that I have a small business thats worth 100,000. I receive an investment by an angel investor for 20%. After the contract ends a couple years later, how do I pay them out? What are my options? Would it be paying them the 20% worth of the business or would it be paying them in stocks?
Thanks everyone,
Wilson
They just keep their 20% ownership of the business forever, and there is nothing about "end of contract". you don't have to do anything besides pay 20% dividend after the company has profit.
they can sell their share to others for higher price.
http://startupguiding.com/browse_categories.php?id=13
For angel investor resources, you can find them at startupguiding.com
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I'm new to this forum and was just a bit curious about Angel Investments pay out. Let's just say that I have a small business thats worth 100,000. I receive an investment by an angel investor for 20%. After the contract ends a couple years later, how do I pay them out? What are my options? Would it be paying them the 20% worth of the business or would it be paying them in stocks?
So basically it's both. Since they own 20% of the company (that's already stock), they are entitled for 20% of net profits as well.
Wilson,
There are a number of different ways to structure an investment. Ultimately, the investor will want to understand how (and approximately when) they will receive their return. This is often called an exit strategy or a liquidity event. However, it doesn't always have to be an "event" but can be structured to provide the returns over time.
If you want to discuss your specific situation - feel free to send me a PM or contact me directly, using the address in my signature.
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