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Silent Partner Expectations Bar/Restaurant

    • 1 posts
    January 12, 2010 5:42 PM EST

    What should a silent investor expect for fully funding a new bar and restaurant?

    I pitched my first sports bar idea to an investor and they said yes immediately. The deal was that they remain silent, they fund 100% of the start-up costs for a 25% stake in the company.

    I felt I was very lucky to get the first person I pitched this deal to say yes but with that said I had a 4 inch thick business plan that was extremely thorough and proved that I know the business very well.

    I am now ready to pitch a second bar idea. This is on a bigger scale and will require a $800,000 investment and I am not sure my 25% approach was even correct the first time.

    What are some common silent partner investment scenarios?

    It was suggested by a new partner for this venture that the investor gets the following:

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    $800,000 invested

    8% interest per year on investment paid quarterly ($16,000 per quarter)

    8% of net profits until investment is paid off (paid annually)

    5% continuing net profits paid annually

    Balloon payment after year 8

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    Any help is much appreciated.

    Thank you