0) Desperate 3-man startup needs capital to survival. (gone 4 years w/o salary)
1) After pitching only thing they get is an offer with 'participation'. This means a preset amount is guaranteed back to the investors in an exit event if the % gain doesn't match a specific minimum. I.e. Investors are guaranteed 1,000,000 if their equity doesn't exceed that value.
2) A partner sees the company is weak, knows the founders are rockstars and rolls them up for 1.2 million.
3) Founders get jobs at company X and 200,000 split among 3 of them before taxes.
1) After pitching only thing they get is an offer with 'participation'. This means a preset amount is guaranteed back to the investors in an exit event if the % gain doesn't match a specific minimum. I.e. Investors are guaranteed 1,000,000 if their equity doesn't exceed that value.
2) A partner sees the company is weak, knows the founders are rockstars and rolls them up for 1.2 million.
3) Founders get jobs at company X and 200,000 split among 3 of them before taxes.