I am currently in the process of searching for financing to open a special event venue/banquet hall. My plan is to utilize debt funding and equity funding. The equity portion will be used to finance the down payment on an approximately $1.5MM loan for real estate and new building construction. I hope to raise the equity portion from family friends and local investors. My targeted amount is $300K with my additional contribution of $100K to offset start-up costs.
Where is a good source of information on equity agreements and buy-back clauses? Specifically, what is a common way to buy-back equity in a small, slow-growth company?
Because the equity investments will be secured by hard collateral (and I view them to not be as risky as other start-up investments), what would be a reasonalbe ROI for an equity investor in this situation? Should equity investors also be paid dividends/disbursements during the "buy back" period?
Do you think a bank (covering the debt funding) would require personal guarantees on the loan from my equity investors?
Thanks in advance for your advice and I look forward to developing a strategy for pitching this opportunity to local investors.
I think I will ask some valuation questions in my next post.