Getting started in discussions with the team and a potential investor based upon getting the company started very shortly (all testing and validation has been completed over six months):
1. Investment of 2,000,000 for enabling a cash flow over the first half operational year.
2. Potential revenue of 3,000,000 over the first year with a risk of achieving only 60% in the first year due to start-up learning.
3. Fixed and variable costs over the first half year is estimated at 1,483,300 followed by 695,800 in the second half to suit the estimated revenue.
Reference to the above what equity in the company should be given to the Investor who will put in 2,000,000 and also be a partner. Being a partner what percentage of the annual profits to the investor? as well as what annual interest is payable on the invested amount to the investor (I am considering that for the first six months of operation no interest will be paid?
What percentage of the annual profits (total no) would be motivation to the key members of the team?
Is it too much to lock profits for two years to begin repayment of the 2,000,000 investment thereafter?
Your thoughts would be appreciated please as this is my first start-up.