If someone invests $10,000 to start up My clothing line what percentage does the investor get back?

How do I figure out the percentage they back? Does this mean lifetime partnership or does that person get a certain share of my company for life? How do I go about this clean and right to the point without that person getting too much of my company?

2 years ago - 5 answers

Best Answer

Chosen by Asker

Step 1: BOTH of you negotiate and agree on terms. If you don't understand how it works, watch the TV show "Shark Tank" on Fridays around 8pm, and get an idea of how an investor determines the value of a business.

Step 2: Once you agree on terms, have an ATTORNEY draft a contract, and then let their own separate attorney review it and make revisions, then you both agree on the final contract.

To answer your questions...

If it is an investment, the investor would purchase a percentage of the overall company OR you can limit it just to the actual clothing itself. So if your company starts selling something besides clothing, it's not included in the agreement, but if the person buys ownership in the company, it applies to EVERYTHING the business does. The partnership would last until the person sells their percent of the company.

Honestly, what are you offering?

The person has the money, so what is your contribution? Do you have connections to suppliers? Are you a designer with a nice resume? Do you have connections to retailers? Why would someone partner with you?

2 years ago

Other Answers

It depends on what you both agree on and enter into a contract.
They would want at least 10% ownership of the company and possibly a percentage of the
yearly gross profits.


by coraann - 2 years ago

depends on how much the investor wants and how much you are willing to let go of

by Zarg222 - 2 years ago

If someone wants to invest $10,000, their share of the company can be negotiated. If you don't want someone to own too much, you need to negotiate that. If someone tells you they will put up $10,000 for your company, you can agree, but tell them that their $10,000 will get them a 10 or 20% ownership in the company. If you want to get more complicated, you can incorporate and sell shares of your company. Be very careful and if you are talking about that much of an investment, you should talk to a lawyer first.

by David L - 2 years ago

You need to write the percentage into your agreement. What is the total amount of capital going into the start-up? What is the value of your investment (designs, entrepreneurship, equipment, cash)?

"Investment" connotes an expectation of return. This could include a share of the profits (thanks, coraann). You might include a future buyout option.

by Charles - 2 years ago