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Technically, this is really the same thing. Either way you cut it, if you bring someone in as as a limited partner or shareholder after the company is formed, a
by Brushfire 16y ago
Technically, this is really the same thing. Either way you cut it, if you bring someone in as as a limited partner or shareholder after the company is formed, and they arent an active member of the company, then these rules apply.
- petercooper 16y agoHow does this work with friends/family situations then? I'm not playing devil's advocate for once, I'm genuinely interested :-) The whole idea of stopping people spending money seems crazy to me, but we don't really have such rules here.
- Brushfire 16y agoFew Ways: 1 - Friends and Family loan you money. You. Or even the company. Loans are totally legit. THey dont get any upside, and you probably dont provide any collateral, and they dont care becuase they trust you. 2 - They invest at the formation of the company. 3 - They invest as an active partner/member of the company. This means they might have liability that goes beyond just their invested amount. They may not know this. They trust you. 4 - They give you money, and you invest it "for them". See #1. This is essentially a personal loan. Otherwise, if your uncle invests and wants legit ownership stake, he is no different than any other angel in the world who wants the same thing.
- petercooper 16y agoAha, thanks. Points 2 and 3 are particularly interesting. I guess they explain why you couldn't just bring in an angel investor as a "co-founder" (or, you could, but it'd have to be handled in an unconventional and delicate manner).