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Interesting early stage INVESTMENT Questions.

    • 1 posts
    January 9, 2014 12:05 PM EST

    Hello Everyone

     

    First post here, wanting to gain some insight on the current Investment situation we are in.

     

    We run a lifestyle Center, taking all aspects of ones lifestyle and bringing it under one roof. Through classes, 1-on-1 training / coaching, products, seminars and events  it include Martial arts, fitness, yoga, meditation, education and entrepreneurial creation. We are looking to continue developing our concept of a fully holistic center that gives people a central hub for balancing, growth, education and creation.

     

    From an interesting journey of an original business partner leaving at a curcial time, it put us in a tough financial position. Having to go deep into credit cards, ruining our credit and doing what we could just to break even, we eventually grew our business over the first 2 years to the position we are in today.  At this point looking to get an investment to fund our expansion into a new center that is 3x the size of our current location.

     

    We have a couple investors interested, one in particular who is extremely interested. Both of us being inexperienced with this type of event, we are looking to figure out something that works for the both of us. An exit strategy is not something we see happening anytime soon, and our investor is looking for some osrt of dividend payment for the duration that they have equity in the company.

    We are trying to figure out a number of things.

     

    Firstly, does equity in the company immediately mean dividends will be paid? Or is this something that would have to be determine din the agreement.

     

    How would something like this work:  An early stage investment that denote lower dividend payments for say.. the first 3 years or so, with the purpose of reinvesting profits, and then increasing dividend payments after this period to bring it to the originally agreed amount based on the equity given for the investment.

     

    Or

     

    Another option of creating dividend payment ranges. Say only 5% of profits given if they are below 20,000 in a given month, but going to 8% if its above that amount. Something to this accord. 

     

     

    What about Royalties? Is this something that would work better in this case?


    Our investor is not looking for voting shares, they are wanting to be a silent investor and collect as we profit.

     

     

    We are inexperienced with this so looking for some advice, we are in the process of talking with our lawyers and some accountants.

     

    Since we are a location based business, with the possibility of opening more locations within the next few years, we are trying to figure out whether ot not we want to create sepearte operating companies for each locatino so that investors would be investing in specific locations rather than the full company as a whole and benefiting from each and every location that is opened. Wondering everyones opinion on this as well.

     

    Any help would really be appreciated !