December 8, 2021
An entrepreneur friend called me recently to ask for my advice. She started a company two years ago, on her own. It’s growing, fast. She needs cash to meet demand. She found a group of Angel investors, knowledgeable in her field and wanting to invest $XXX,000. They want YY% of the company, but she wants to give away only ZZ% of the company (where Z<Y) in return for the investment. She’s consulted with a handful of entrepreneurs who told her either to not dilute her ownership and don’t take the money, or stick to her ZZ% figure. After a handful of conversations, she had a handful of their opinions about what to do, but no way to determine how to proceed. Frustration took over. What should she do, she asked?