Bob Gulian wrote:
Excellent links, Brian. I personally, have never worked under this
kind of arrangement. Possibly it will be more common with the economy
in the state that it is. There are different kind of equity
arrangements. Ten thousand shares of stock for "when the company goes
public" has got a far less chance of paying off than a partnership (a
share in company income and direction).
Bob
I wouldn't get involved in an equity relationship of any kind unless
I knew the people involved and believed in the business. For instance,
a friend of mine was having trouble getting a bank loan to start a
business -- I suggested to him that he try equity financing. I chipped
in a little money and so did about ten of his friends. Now the business
is doing well and has expanded into a new location.
I got burned once by somebody who offered me 50% of payment in
equity for a company that he later sold. In that case, the business
was an international affair that was based in the Virgin Islands and
doing business in Latin America. I suppose I could have recovered $50k
or so with a lot of trouble, but I already moved on and didn't need
the hassle. The "offshore" business was a source of entertainment for
me: the owner would sign me on as a contact person and I'd get phone
calls from people who wondered if our business was a scam.
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