how much should investor get so I got a great question in front of my YouTube
great question in front of my YouTube
great question in front of my YouTube viewers Sergey love you guys who wrote
viewers Sergey love you guys who wrote
viewers Sergey love you guys who wrote in the say I have a difficult question
in the say I have a difficult question
in the say I have a difficult question for me and for many people one person
for me and for many people one person
for me and for many people one person inventor believed in me and put money in
inventor believed in me and put money in
inventor believed in me and put money in my business for example $1000 the
my business for example $1000 the
my business for example $1000 the question is how do I divide with him the
question is how do I divide with him the
question is how do I divide with him the profits what percentage to give him and
profits what percentage to give him and
profits what percentage to give him and what terms and what time frame possible
what terms and what time frame possible
what terms and what time frame possible and for how long I run a business on
and for how long I run a business on
and for how long I run a business on 100% he is only the investor thank you
100% he is only the investor thank you
100% he is only the investor thank you pH would be great to commit a video
pH would be great to commit a video
pH would be great to commit a video response for all how to make a
response for all how to make a
response for all how to make a relationship with investors so Sergey
relationship with investors so Sergey
relationship with investors so Sergey here is your video now this is a common
here is your video now this is a common
here is your video now this is a common question and as entrepreneurs you know
question and as entrepreneurs you know
question and as entrepreneurs you know we want to often raise capital if you
we want to often raise capital if you
we want to often raise capital if you can’t do it ourselves we need we need
can’t do it ourselves we need we need
can’t do it ourselves we need we need money to launch this thing and make it
money to launch this thing and make it
money to launch this thing and make it big time there are four main ways to
big time there are four main ways to
big time there are four main ways to structure a deal with an investor and
structure a deal with an investor and
structure a deal with an investor and each deal is different so there’s no
each deal is different so there’s no
each deal is different so there’s no easy way to say hey if it gives you
easy way to say hey if it gives you
easy way to say hey if it gives you $1,000 and here’s how you want to pay it
$1,000 and here’s how you want to pay it
$1,000 and here’s how you want to pay it back each single deal every deal is
back each single deal every deal is
back each single deal every deal is different this is coming from background
different this is coming from background
different this is coming from background and angel and venture capital investing
and angel and venture capital investing
and angel and venture capital investing so give you the four options and you can
so give you the four options and you can
so give you the four options and you can see what feels right and how you want to
see what feels right and how you want to
see what feels right and how you want to match it up with your investor the first
match it up with your investor the first
match it up with your investor the first is dead so debt is a loan they don’t own
is dead so debt is a loan they don’t own
is dead so debt is a loan they don’t own any of your business but they’re giving
any of your business but they’re giving
any of your business but they’re giving you money that you have to pay back and
you money that you have to pay back and
you money that you have to pay back and to give you $1,000 maybe you say it’s a
to give you $1,000 maybe you say it’s a
to give you $1,000 maybe you say it’s a 10 percent interest rate and every year
10 percent interest rate and every year
10 percent interest rate and every year you have to pay that 10 percent plus
you have to pay that 10 percent plus
you have to pay that 10 percent plus some of the principal down just like
some of the principal down just like
some of the principal down just like going to a bank and getting a loan but
going to a bank and getting a loan but
going to a bank and getting a loan but often the rates are going to be a lot
often the rates are going to be a lot
often the rates are going to be a lot more favorable towards the investor than
more favorable towards the investor than
more favorable towards the investor than you obviously often you would go when
you obviously often you would go when
you obviously often you would go when you can’t get a loan from a bank because
you can’t get a loan from a bank because
you can’t get a loan from a bank because it’s too risky so you have to pay a
it’s too risky so you have to pay a
it’s too risky so you have to pay a premium but that’s death number two is
premium but that’s death number two is
premium but that’s death number two is equity so equity is their taking a piece
equity so equity is their taking a piece
equity so equity is their taking a piece of your company so they don’t you don’t
of your company so they don’t you don’t
of your company so they don’t you don’t have to pay them anything back on a
have to pay them anything back on a
have to pay them anything back on a monthly basis or quarterly basis or
monthly basis or quarterly basis or
monthly basis or quarterly basis or whatever it is but they own part of your
whatever it is but they own part of your
whatever it is but they own part of your company so if they’re giving you $1,000
company so if they’re giving you $1,000
company so if they’re giving you $1,000 maybe they get 10% of your company now
maybe they get 10% of your company now
maybe they get 10% of your company now that’s that’s a pretty low terrible
that’s that’s a pretty low terrible
that’s that’s a pretty low terrible evaluation but basically what you’re
evaluation but basically what you’re
evaluation but basically what you’re deciding is okay our business is worth
deciding is okay our business is worth
deciding is okay our business is worth this amount of money so if your business
this amount of money so if your business
this amount of money so if your business is worth $10,000 that’s what we think
is worth $10,000 that’s what we think
is worth $10,000 that’s what we think our business is worth today
our business is worth today
our business is worth today and by you giving us $1,000 then we’re
and by you giving us $1,000 then we’re
and by you giving us $1,000 then we’re going to give you 10% and how that
going to give you 10% and how that
going to give you 10% and how that person gets paid is when either you do a
person gets paid is when either you do a
person gets paid is when either you do a dividend from the company to the
dividend from the company to the
dividend from the company to the shareholders and you know you’ll get 90
shareholders and you know you’ll get 90
shareholders and you know you’ll get 90 percent of the dividend and they’ll get
percent of the dividend and they’ll get
percent of the dividend and they’ll get 10% of the dividend or ultimately the
10% of the dividend or ultimately the
10% of the dividend or ultimately the goal is when you sell the company right
goal is when you sell the company right
goal is when you sell the company right when you sell the company you get bought
when you sell the company you get bought
when you sell the company you get bought for 10 million dollars they get a
for 10 million dollars they get a
for 10 million dollars they get a million dollars because they own 10% and
million dollars because they own 10% and
million dollars because they own 10% and you get 9 million dollars so that’s the
you get 9 million dollars so that’s the
you get 9 million dollars so that’s the exit strategy but it’s a typically a lot
exit strategy but it’s a typically a lot
exit strategy but it’s a typically a lot longer play because you got to build up
longer play because you got to build up
longer play because you got to build up the company to get acquired number 3 is
the company to get acquired number 3 is
the company to get acquired number 3 is convertible debt with convertible that
convertible debt with convertible that
convertible debt with convertible that it’s a mix of the two so this is
it’s a mix of the two so this is
it’s a mix of the two so this is favorable for the investors a lot more
favorable for the investors a lot more
favorable for the investors a lot more than the entrepreneur but typically how
than the entrepreneur but typically how
than the entrepreneur but typically how it works is the investor gets a loan
it works is the investor gets a loan
it works is the investor gets a loan that they’re they’re getting paid so
that they’re they’re getting paid so
that they’re they’re getting paid so you’re making them monthly payments on
you’re making them monthly payments on
you’re making them monthly payments on the loan but at any point the investor
the loan but at any point the investor
the loan but at any point the investor can convert that to equity so if they
can convert that to equity so if they
can convert that to equity so if they feel like you’re going to make a big
feel like you’re going to make a big
feel like you’re going to make a big deal you’re going to you’re going to get
deal you’re going to you’re going to get
deal you’re going to you’re going to get sold you’re going to start paying
sold you’re going to start paying
sold you’re going to start paying dividends then they can say ok you know
dividends then they can say ok you know
dividends then they can say ok you know what I don’t want that anymore I’m going
what I don’t want that anymore I’m going
what I don’t want that anymore I’m going to convert that into equity so it’s a
to convert that into equity so it’s a
to convert that into equity so it’s a great way for investors to lower their
great way for investors to lower their
great way for investors to lower their risk right there they’re getting paid
risk right there they’re getting paid
risk right there they’re getting paid monthly from you for their debt and then
monthly from you for their debt and then
monthly from you for their debt and then whenever they see an opportunity to get
whenever they see an opportunity to get
whenever they see an opportunity to get to the equity because it’s going to be
to the equity because it’s going to be
to the equity because it’s going to be favorable for them they say okay we’re
favorable for them they say okay we’re
favorable for them they say okay we’re going to convert our debt and turn it
going to convert our debt and turn it
going to convert our debt and turn it into equity so not as great for the
into equity so not as great for the
into equity so not as great for the entrepreneur but a great deal for
entrepreneur but a great deal for
entrepreneur but a great deal for investors and a super common for a lot
investors and a super common for a lot
investors and a super common for a lot of angel investors number four is
of angel investors number four is
of angel investors number four is royalties and here the investor is not
royalties and here the investor is not
royalties and here the investor is not taking a piece of your company you’re
taking a piece of your company you’re
taking a piece of your company you’re not paying them back a certain fee every
not paying them back a certain fee every
not paying them back a certain fee every month on a loan but they take a
month on a loan but they take a
month on a loan but they take a percentage of every sale that you make
percentage of every sale that you make
percentage of every sale that you make off the top so whatever product you’re
off the top so whatever product you’re
off the top so whatever product you’re selling if it’s a hundred dollar product
selling if it’s a hundred dollar product
selling if it’s a hundred dollar product and they say okay I want a five percent
and they say okay I want a five percent
and they say okay I want a five percent royalty so that I’m going to give you
royalty so that I’m going to give you
royalty so that I’m going to give you the thousand dollars and every time you
the thousand dollars and every time you
the thousand dollars and every time you make a sale I’m going to take five
make a sale I’m going to take five
make a sale I’m going to take five percent of that so if you’re selling it
percent of that so if you’re selling it
percent of that so if you’re selling it for hundred bucks every time you make a
for hundred bucks every time you make a
for hundred bucks every time you make a sale you’re paying them five dollars but
sale you’re paying them five dollars but
sale you’re paying them five dollars but they don’t own any of your business and
they don’t own any of your business and
they don’t own any of your business and you don’t own any debt that you have to
you don’t own any debt that you have to
you don’t own any debt that you have to pay them back so it’s another common
pay them back so it’s another common
pay them back so it’s another common model to use and often they’ll still mix
model to use and often they’ll still mix
model to use and often they’ll still mix it up they’ll say I want debt with a
it up they’ll say I want debt with a
it up they’ll say I want debt with a royalty or I want equity
royalty or I want equity
royalty or I want equity with the world – I want some debt and
with the world – I want some debt and
with the world – I want some debt and some equity every single deal is
some equity every single deal is
some equity every single deal is different but those are the four main
different but those are the four main
different but those are the four main components
components
components so just to recap again number one is
so just to recap again number one is
so just to recap again number one is debt
debt
debt number two is equity number three is
number two is equity number three is
number two is equity number three is convertible debt and number four is
convertible debt and number four is
convertible debt and number four is royalty one last thing I want to remind
royalty one last thing I want to remind
royalty one last thing I want to remind you guys about is when you’re bringing
you guys about is when you’re bringing
you guys about is when you’re bringing on an investor you don’t just want money
on an investor you don’t just want money
on an investor you don’t just want money okay you want somebody who can bring
okay you want somebody who can bring
okay you want somebody who can bring more to the table you want somebody who
more to the table you want somebody who
more to the table you want somebody who can give you advice on how to grow
can give you advice on how to grow
can give you advice on how to grow business you want somebody’s going to
business you want somebody’s going to
business you want somebody’s going to open doors and make connections for you
open doors and make connections for you
open doors and make connections for you you want somebody who might help you get
you want somebody who might help you get
you want somebody who might help you get into the media or might bring on new
into the media or might bring on new
into the media or might bring on new customers for your company you want more
customers for your company you want more
customers for your company you want more than just the money because you have a
than just the money because you have a
than just the money because you have a limited amount of people who you can
limited amount of people who you can
limited amount of people who you can bring on board right you only have so
bring on board right you only have so
bring on board right you only have so much debt you can take on you only have
much debt you can take on you only have
much debt you can take on you only have so much equity you can give away you’ll
so much equity you can give away you’ll
so much equity you can give away you’ll have so much of a world so you can get
have so much of a world so you can get
have so much of a world so you can get to somebody and you want to make sure
to somebody and you want to make sure
to somebody and you want to make sure that the people you bring on are
that the people you bring on are
that the people you bring on are strategic and really want to help you
strategic and really want to help you
strategic and really want to help you instead of just giving you money so
instead of just giving you money so
instead of just giving you money so always have that caveat in the back your
always have that caveat in the back your
always have that caveat in the back your mind think about this first you bringing
mind think about this first you bringing
mind think about this first you bringing in it’s like great I need the money
in it’s like great I need the money
in it’s like great I need the money awesome but what else can they bring to
awesome but what else can they bring to
awesome but what else can they bring to the table besides the money belief fools
the table besides the money belief fools
the table besides the money belief fools we’re watching like the video you can
we’re watching like the video you can
we’re watching like the video you can support me by clicking on the link in
support me by clicking on the link in
support me by clicking on the link in the description leave a comment let me
the description leave a comment let me
the description leave a comment let me know what you think ask the question if
know what you think ask the question if
know what you think ask the question if you want to make a video reply for you
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