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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.
Asked by Tommy Hult
Posted: Sunday, September 23, 2007 | Found in Starting Up
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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.
Rosalind Resnick is the founder and CEO of Axxess Business Consulting, a New York consulting firm that advises startups and small businesses.
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