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Old 06-08-2011, 11:32 PM
Mx2 Mx2 started this thread
 
2 posts, read 2,782 times
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I have a new startup that has not made any revenues yet. I've done some projections but coming up with a true valuation for a startup with no past revenues is difficult (settled on a number of $300K). I've told a few people about the venture and already have serious potential investors. It's now getting close to the time where ownership structures/percentages must be solidified. One investor has connections/expertise beneficial to the business (potentially cash also) the other $40K in cash. Does anyone have any suggestions and/or advice on how to handle this situation while keeping control of my company and running without ownership conflicts? Contracts will be drawn up once structure established but am looking for a little guidance and also info on how profits could be distributed.
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Old 06-09-2011, 06:50 AM
 
Location: The Triad (NC)
26,855 posts, read 57,874,473 times
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Quote:
Originally Posted by Mx2 View Post
I have a new startup that has not made any revenues yet.
No GROSS sales whatsoever?

Quote:
Contracts will be drawn up once structure established but am looking for a little guidance and also info on how profits could be distributed.
what profits?
do you even have a gross?

Quote:
Does anyone have any suggestions and/or advice on how to handle this situation while keeping control of my company and running without ownership conflicts?
It can't /won't happen.
No one (with any sense) is going to bail you out without getting control.
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Old 06-09-2011, 07:26 AM
 
10,139 posts, read 22,414,398 times
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Of course what you are talking about is the unregistered sale of securities which is a crime and exposes you and your advisors to personal civil liability. When you take money from people who are investors in your business, no matter how you slice it you are selling them a security. Can the sale be exempted? Maybe, but not by you. You need to see a lawyer where ever you live to keep you out of trouble.
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Old 06-09-2011, 09:00 AM
 
1,475 posts, read 2,181,531 times
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Quote:
Originally Posted by Wilson513 View Post
Of course what you are talking about is the unregistered sale of securities which is a crime and exposes you and your advisors to personal civil liability.
What?! The OP didn't say anything about not reporting the investment.
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Old 06-09-2011, 09:54 AM
 
Location: The Triad (NC)
26,855 posts, read 57,874,473 times
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Originally Posted by Rich_CD View Post
What?! The OP didn't say anything about not reporting the investment.
Besides which, there is no basis to assume that the company is anything more than a DBA (at present).
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Old 06-09-2011, 11:57 AM
 
10,139 posts, read 22,414,398 times
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Quote:
Originally Posted by Rich_CD View Post
What?! The OP didn't say anything about not reporting the investment.

It doesn't have anything to do with reporting. It has everything to do with compliance and exemption. Very expensive compliance and exemption. Look it up, then post up and I'll explain more of it.
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Old 06-09-2011, 12:30 PM
 
10,871 posts, read 41,162,985 times
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Quote:
Originally Posted by Mx2 View Post
I have a new startup that has not made any revenues yet. I've done some projections but coming up with a true valuation for a startup with no past revenues is difficult (settled on a number of $300K). I've told a few people about the venture and already have serious potential investors. It's now getting close to the time where ownership structures/percentages must be solidified. One investor has connections/expertise beneficial to the business (potentially cash also) the other $40K in cash. Does anyone have any suggestions and/or advice on how to handle this situation while keeping control of my company and running without ownership conflicts? Contracts will be drawn up once structure established but am looking for a little guidance and also info on how profits could be distributed.
With as little information posted about what your business structure now is and how you intend to sell an interest in it to an investor ... a partner? personal loan? or simply a % holding investor (via shares or ?) ...

You need to consult with a business savvy lawyer & accountant to learn about your business options to raise capital, provide a ROI for your investor(s), etc.
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Old 06-09-2011, 04:23 PM
Mx2 Mx2 started this thread
 
2 posts, read 2,782 times
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It's a startup company and we have not even done one transaction because we're still in the initial stages of development. We just happen to have a couple individuals who are interesting in getting involved in our venture. They liked the business so much they inquired about a partnership and their offers were unsolicited. No smoke just the business idea and structure and I received monetary offers. I was looking for individuals who have been in similar situation who I could potentially use as a reference. To this point all startup costs have been funded personally.

sunsprit - thank you for the post and that was our plan to seek the guidance of a business attorney. However, I was interested in seeing here if there were any business owners with a similar experience and/or knowledge to share.
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Old 06-09-2011, 08:51 PM
 
Location: US, California - federalist
2,795 posts, read 3,099,406 times
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What about incorporating and selling shares? Or, simply issuing some corporate paper such as forms of bonds or promissory notes which generate working capital while not requiring active participation in management? Would your current assets be able to cover any paper issued, which could be a primary concern for investors in a worst case scenario requiring liquidation.

How difficult is it to get listed on the Pink Sheets?
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Old 06-10-2011, 11:47 AM
 
10,139 posts, read 22,414,398 times
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Quote:
Originally Posted by danielpalos View Post
What about incorporating and selling shares? Or, simply issuing some corporate paper such as forms of bonds or promissory notes which generate working capital while not requiring active participation in management? Would your current assets be able to cover any paper issued, which could be a primary concern for investors in a worst case scenario requiring liquidation.

How difficult is it to get listed on the Pink Sheets?
The pinks are for listed shares that do not meet the requirements of the public exchange like a price of less than $1 etc.

The steps you described are the sale of securities and even if only one bond is sold it has to comply or be exempted. Either way he needs to spend more than he will be raising in legal fees. A problem for small start ups.
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