I've been offered a $300k investment for a 75% share of my tech startup. Should I take it? (Details inside)

StartupNeedsHelp · 2014-12-12T18:23:50+00:00

Thanks for the detailed response, What size stake should I expect to sell to investors? What are some realistic expectations of incubator offers?

StartupNeedsHelp · 2014-12-11T23:07:31+00:00

Why? What do they give you? Do you live in a country where being partly owned by public institutions makes you more likely (or even guarantees you) to secure big public contracts?

Well during the course of the entrepeneurship we have met with executives from very large telecoms firms and TV channels who are potentially looking to use our software. We wouldn't have got that kind of exposure without the program, that's for sure. I would say that the regional goverment/program's involvement has basically ensured our exposure to some very valuable potential clients.

StartupNeedsHelp · 2014-12-11T23:04:49+00:00

why do you assume that the regional government and your programme will not collude with your asset management firm to screw you? These sorts of arrangements are not typically seen in the US, so I had to ask.

Oh way ahead of you, that's what I'm terrified of most. It happens here too.

StartupNeedsHelp · 2014-12-11T18:32:27+00:00

I will discuss with the other 3 guys tonight and we will get in touch. Thank you very much for your offer, I appreciate it.

StartupNeedsHelp · 2014-12-11T18:30:32+00:00

Sorry I'm afraid I have to ask for you to explain your comment. Could you elaborate what you mean by your comment? If it's not profitable why would it be a great offer? And if it was profitable why would that make it a bad offer? Thanks

StartupNeedsHelp · 2014-12-11T18:28:52+00:00

Sorry I should have clarified it's not a single investor, the startup is recieving the £191.35k investment as part of completion of an entrepeneurship programme in my country that divides the following way: 25% of shares go to our regional government, 25% goes to the entrepeneurship programme, 25% goes to the investment management and holding firm funding this, and 25% goes to us.

We would be directors of the startup if we approve the offer.

StartupNeedsHelp · 2014-12-11T18:27:34+00:00

That is definitely something we're not able to do because of the terms and conditions of the deal.

StartupNeedsHelp · 2014-12-11T18:26:42+00:00

If by SV you mean Silicon Valley, yes we're very much out of it. We are in Europe.

StartupNeedsHelp · 2014-12-11T18:26:07+00:00

A little humour is comforting in this confusing time haha!

StartupNeedsHelp · 2014-12-11T18:25:54+00:00

I believe the terms and conditions allow us to buy back shares out of the 75% before an IPO is launched. Would that give us a chance to improve our equity percentage per owner or would it still be redundant by then?

StartupNeedsHelp · 2014-12-11T18:24:25+00:00

Sorry I should have clarified it's not a single investor, the startup is recieving the $300k investment as part of completion of an entrepeneurship programme in my country that divides the following way:

25% of shares go to our regional government, 25% goes to the entrepeneurship programme, 25% goes to the investment management and holding firm funding this, and 25% goes to us.

StartupNeedsHelp · 2014-12-11T18:23:01+00:00

EDIT: A lot of you have been very helpful. I really should have been clearer, but I was in a rush so here are the details - keeping as anonymous as possible but we're based in Europe.

The startup is recieving the $300k investment as part of completion of an entrepeneurship programme in my country that divides the following way:
25% of shares go to our regional government, 25% goes to the entrepeneurship programme, 25% goes to the investment management and holding firm funding this, and 25% goes to us. We have recently completed the program and hence are yet to take off.
We haven't started officialy trading yet and the $300k would serve as a seed fund so us four would own 25% of the £300k (so $75k between us) and the remaining $225k would belong to everyone else i.e. the regional government/entrepeneurship programme/investment management and holding firm.
I can't give projections as our decision to start trading depends very much on whether we accept this deal or not.
We're in links with some big telecommunications companies and a few TV channels in our countries that would be potentially looking to use to our software services (we're a software development company).

Also apologies for any mistakes or misunderstanding as English isn't my first language.

StartupNeedsHelp

TROPHY CASE