Let us say you have started your business with needed seed and first stage money that was raised from a family member whose funds arelimited but was willing to front the start of the business. You have gotten a good start with the business but now realize that to move to the “later stage” you are going to need more capital. At this point you have determined that you have enough evidence that your idea and the resulting business have strong enough legs to take it home. So you want to now raise the capital needed to do so.
You are trying to decide between a looking for a single investor and putting together a number of smaller investors (all investing their money as equity holders). What are the advantages or disadvantages of each option?
You thought you might approach the investors as debt holders rather than owners with the option if the business’s cash flow does not work out for the investors to be able to convert their debt into equity owner’s shares. Can you see the advantages of setting the investment of capital up this way?
If an investor or investors were willing to invest in your business how much of the ownership are you willing to give up for the capital you need to go forward?
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