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Why would you ever give a single investor 51%?
by time_management 18y ago
Why would you ever give a single investor 51%?
- brk 18y agoBecause they paid for it? Because you needed the money? This is all really a hypothetical exercise anyway.
- time_management 18y agoLet's say the company's worth $1 million pre-money. To keep the analysis simple, let's say I'm the single founder, even though it's unlikely that I would be (single-founder successes are pretty rare). In theory, I'd be willing to give up 49% for $1 million. In practice, I'd ask for a better deal, given the risk inherent in taking on an investor. $1m for 40% I'd probably do, or $1.25m for 49%. At 51%, however, he'd basically become my boss, and I'd be an equity employee, so I'd consider it an acquisition and treat it as such. I'd negotiate such terms as CEO job title, a salary, and severance. He'd probably refuse the offer, and thus I'd end up going without his investment.