Question added to topic Starting a Business • September 23, 2007
I'm starting a business with an investor. If I have the knowledge and he has all the capital, what is a fair percentage of ownership for both of us?
I have 20 years experience in the industry and currently run a similar company. I have an investor that is willing to back the complete project. The investor is willing to purchase the building and put up 100% of the capital. I would run the day to day details. What percent of ownership is realistic.
When it comes to investing, cash is king. So don't be surprised if your investor asks for the lion's share of the equity. That said, your expertise is also valuable -- otherwise, the investor wouldn't want you as his partner. The reality is that deals like these vary all over the map -- from 50/50 splits to 90/10 deals in favor of the investor. Assuming that you're willing to forgo a salary until the business starts making a profit, you can typically negotiate a much bigger equity stake.