Finding investors..

A true Entrepeneur may get investors, but a true entrepreneur will still be successful if they cannot. It all depends on what works out best for them in the long run.

A leg up is not a requirement to be extremely successful. In some cases it limits how successful someone can be. (Running their business with their hands tied due to investor demands, or they simply cant fully appreciate what they have if the capital came too easy)
 


If you've got a really solid idea for a business but you need a few mil to do it you can either try to get it or you can just scrap the entire plan. What does the entrepreneur do?
 
Propellorhead said:
Entrepreneurs do sometimes needs other peoples money, especially if they want to grow their business at a more rapid rate than boot strapping it themselves.

Any savvy investor is going to require a business plan which is going to include a detailed explanation of the entire business model, including financials, competition, barriers to entry, marketing plans, executive summary etc etc.

I hope that I am not stating the obvious but the first step is to set up a company, most likely an LLC that will detail investor shares, options, and of course standard legalize' that goes into any articles of incorporation. Oh and don't forget that you will also require an operating agreement to go with it.

It is a lot of work when you go this route but the marketing plans and business plan are something you should be writing for yourself anyways so that you have a blueprint for success.

Good luck, head down. Let us know how you make out
Click to expand...

In my experience and in following the advice of some attorneys I trust very much, I've learned over the years that if you're looking for an entity with shares and options, an LLC is most probably not the correct vechicle.

First, while you can say it's just semantic, there are no "shares" in an LLC, only "units."

Second, the law provides a definition of what shares and options are in the context of a corporation. And there's plenty of legal statute there. With an LLC, you'd have to have an attorney draft up agreements to emulate that.

All this and more is why you'd never find an investor willing to invest in an LLC anyway, which I mention because that's the original question. So in that case you'd be paying hefty legal fees (10-15k in my own experience) to convert the LLC to an S- or C-Corp and even then you may have already scared off investors.
 
fcastle said:
In my experience and in following the advice of some attorneys I trust very much, I've learned over the years that if you're looking for an entity with shares and options, an LLC is most probably not the correct vechicle.

First, while you can say it's just semantic, there are no "shares" in an LLC, only "units."

Second, the law provides a definition of what shares and options are in the context of a corporation. And there's plenty of legal statute there. With an LLC, you'd have to have an attorney draft up agreements to emulate that.

All this and more is why you'd never find an investor willing to invest in an LLC anyway, which I mention because that's the original question. So in that case you'd be paying hefty legal fees (10-15k in my own experience) to convert the LLC to an S- or C-Corp and even then you may have already scared off investors.
Click to expand...

You are correct in that you can't issue shares with an LLC but no law firm on Earth is going to charge you $10k to convert an LLC to a corp. It could easily be an hour's work for a paralegal.
 
I'm sorry Dullspace, that's just not true. This is a far more complicated thing than you're portraying. In some respects, sure, if you don't mind the IRS shafting you with a giant tax bill at the end of the year then go ahead and just have that paralegal do it.

In my case it was close to $12k. And it was money well spent, I pay far less in taxes as a Corporation than I would be paying today had I remained an LLC.

If you're a single member LLC with little to no assets and little to no income, hell, go to Legal Zoom. If you're more complicated, adjust accordingly.
 
That's what I mean. It can be a complicated process but it can also be a very painless one for a single member LLC.
 
I just reread my post and you're right, I shouldn't have made a blanket generalization. But I imagine the vast majority of people with LLC's on this forum are single member with no employees. I think it misrepresents the process to say it's either definitely painless and cheap or complicated and expensive.
 
You must log in or register to reply here.
Top Bottom