Cloud-based Software Delivery · Rapid Prototyping

For a small 11 months old innovative IT startup-India if investor wants to get 20% stake from US what should be the basic rules in inviting such a stake?

Amit Lohogaonkar Technology Startup

December 23rd, 2019

Small IT profitable startup in cloud based multi tenant platforms.

Paul Garcia marketing exec & business advisor

Last updated on December 23rd, 2019

I don't understand the proposal.

If you are you asking what an investor should get for their money, it doesn't matter where they are. The question is more about what money is worth to you. Unless you NEED money, there's no reason to take on investors. Consider that equity is a limited resource. It is the last way you choose to trade value. If you need money and can get a loan, it is typically safer for your business, and you only have yourself to worry about. If you can't get a loan, consider why. An investor should be more than a source of cash. They should bring some expertise, connection to customers, or access to other resources you haven't been able to reach on your own. Their expectations will be higher than for a loan. And the way for them to get their money back may involve having to wholly sell your company.

Since I don't understand your proposal, I can only guess what you suggest doing. And I don't know why you're doing it, which matters. If you are profitable, as you say you are, then why would you take anyone's money who is not a customer? Work on your plan to stay self-funded as a priority.

Amit Lohogaonkar Technology Startup

December 24th, 2019

Thanks Paul! Thats perfect! As we are profitable money is not the only criteria but its good to have it anyway. If investor is bringing connections, access to other resources is it good to invite them with 20% stake. Although I watched shark tank fancy things, in reality is it good to just get more loan from bank or invite a third party as an investor who can help scale(India IT)?