Hey Satchee,
I’m afraid you may have missed a key opportunity to save this investment.
You could have made the point that over the last 4-6 months, the Euro has significantly appreciated against the US dollar. With other words, the Euro has gained substantial buying power here in the U.S. making everything from shopping sprees, real estate, and dollar-based investments rather cheap for Europeans.
Simply put, a $100,000 investment in your restaurant would have cost this investor about EUR 68,500 back in March of this year. About 3 weeks ago, the same $100,000 investment would have cost this investor only EUR 62,200.
So, now let’s assume that over time, the US dollar will strengthen again, because (i) it always does (take a look at historical exchange rates against major European currencies) and (ii) because the economy (ies) in Europe started slowing down, too.
Let’s further assume that your restaurant will be successful and you manage to pay out a financial return for your investors. Under such a scenario the investor would not only benefit from the capital gains, but also tag on some extra points because of the strengthening US currency.
With other words, let’s say you’re paying out $10,000 in dividends or capital gains to this investor, today this would only yield about EUR 6,400. Let’s assume the US dollar/Euro exchange rates goes back to where it was in August of 2007, the very same payout would yield EUR 7,460 (a 17% increase).
No a bad deal at all.
As far as your protecting your idea is concerned, there really isn’t a lot you can do. RobertJ is spot-on assuming that your most effective protection is probably playing your cards right. Reputable Angels and VCs aren’t in the business of hijacking ideas. As a matter of fact, even the remotest impropriety in that regard would put them out of business.
I’m not sure if the same can be said about restaurant chains. So be careful.
I hope this helps.
Mark
-------------------------
Jackson Steiner
http://www.JacksonSteiner.com
Advanced Document Design for entrepreneurs, intermediaries, and the financial services industry.
http://www.Publications.FastVentures.com
New Topic
Post Reply
Follow Topic
