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Bringing in investors to help fund one’s company

There are a variety of roadblocks a business owner could encounter when getting their company started or trying to grow their company. This includes financial roadblocks. There are many different funding options an owner could turn to for trying to overcome such challenges. This includes selling portions of their business to investors to bring an influx of capital into their business.

Now, the decision to sell a part of one’s business to investors is a big one that has the potential to have impacts on many things for a company. This includes things such as where control over the business lies, how the company is run and operates and the business’ future prospects for funding.

So, when a business owner has decided to go the route of bringing in investors into their business, there are many things it can be important for them to give careful thought and attention to, including:

  • Who they bring in. Not all investors are the same. So, finding investors who are the right match for one’s overall goals for one’s company can be important.
  • What percentage of the business they sell to investors. This can have significant impacts related to control of the company. So, thinking carefully about what they want the control situation of their company to be can be important for a business owner when deciding how much of their company to offer to investors.
  • The terms of the legal agreements related to bringing the investors in. These terms can play a big role in establishing the exact nature of the new investors’ relationship to and role in the business.

As one can see, there are many important issues, including legal issues, that come up in relation to seeking out funding for one’s business through selling equity in the company to investors. When pursuing this funding option for their business, a California business owner may want an experienced lawyer’s help with contract matters and other legal matters that come up.

Source: CBS New York, “How Much Of Your Small Business Should You Offer To Investors?,” Mario McKellop, July 27, 2017

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