I am currently preparing to raise funds for a small business. I anticipate funding will come from family, friends and perhaps a few angel investors. My question is in regard to what I can offer investors in return for their investment.
One option I am considering is offering investors a share of the profits. Specifically, I am considering offering investors 100% of profits until they recover their initial investment and then 40% thereafter. Another option I`m considering is proposing to buyout the investors after approximately five years. However, this is a business that I wish to make a career out of and do not wish to sell. I also do not foresee it going public. Therefore, I do not foresee an IPO, sale or merger as an exit strategy for investors.
Thus, I am seeking recommendations or potential strategies on what I may offer investors of the family, friend and angel varieties in return for their investment. Thank you very much in advance.