What is the catch with Equity Investment?

HappyUser

Hi!


I want to research a novel device and I cannot find funding as they want me to have a university partner and universities want to own the IP.


I am thinking to get equity investment, or is there any better way?


If not, what is the catch with equity investment? I understand that I will pay them part of the profits, but what if the company has no profits and if I want to close it at some point? Will I be okay to take the decision myself to close it and will I have to repay anything?

Pennywise

HappyUser wrote: »

If not, what is the catch with equity investment? I understand that I will pay them part of the profits, but what if the company has no profits and if I want to close it at some point? Will I be okay to take the decision myself to close it and will I have to repay anything?

They'll want voting rights. So any major decisions (such as closing down) will require their approval. The bigger percentage of shares they buy, the bigger the voting power they have.

Dox

This seems to be another of your random posts. Maybe if you're serious you need to do some serious legwork and research using google, your local library, chamber of commerce etc. Expecting people to give you chapter and verse on a forum like this is hopelessly over-optimistic.

Marcon

Try one of the many sites offering crowdfunding, assuming you've got a well thought out business plan, an excellent product, credible collaborators etc.

sparkermarketing

This is such a complex topic and impossible to answer on here in any reasonable way. If you don't even understand the basics such as ownership rights, then it will probably get too complicated for you very quickly when you start to look at the differences between Series A,B and C funding rounds and the vesting allocations of shares in future etc etc...

How much work have you done to build your business/idea so far? Most investors will require something more solid than simply an idea to research (even if the idea is so unique and innovative that they cant resist, they will want you to prove there is a business behind it).