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Re: [newtech-1] Forming a Company with International Investors

From: Michael K.
Sent on: Friday, January 11, 2013 10:02 AM

Much depends on what your vision is medium and long term for your business. If you plan on raising institutional investment in the future (venture capital), then I would recommend you issue convertible notes at a discount (20% over A round) with a modest rate (say 10% PIK), which would convert at a discount when an institutional investor comes in. This would avoid thorny valuation issues now, as I assume you are early stage. Remember most institutional investors expect to exit (sell) their investment in a 5-10 year time horizon. If you want to keep your business as a "family business" and don't expect much capital raising in the future, then you can opt to give your family common stock in your company, that is a % ownership you mutually agree is fair. I don't recommend taking pure debt from "friends and family", as this can be misaligned interests in the future.

Happy to discuss more offline if you wish. Feel free to ping me [address removed]  

Good luck,


On Fri, Jan 11, 2013 at 9:35 AM, Alan Hyman <[address removed]> wrote:
Hello NYTM. 
Happy New year to everyone. I have some questions about forming a company and accepting investment. Here is the good situation to be in: My partners's family overseas wants to invest in our company. What are the different things we could offer them? One idea was to give them a percentage stock of the company. Then as my partner and I make profit we would buy back shares. Also what issues will we find when accepting investment from an overseas investor?  Has anyone been in this situation before? I would love to hear any stories you may have out of your experiences forming companies and accepting investments. Advice?

Are there any reliable resources online we could use to research these questions?

Thank you. 

Alan Hyman
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