Investor???????
Question by DP : Investor???????
My brother is planning to start a clothes line. I want to invest in it so he can get the copy right and all that. Now lets say that he makes it big what do I get for investing in the company?
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Tags: investor
When you invest in his company, your investment gives you a right to some percentage of the profits.
You need to work out a deal in which you get $X for your investment. As an example, you invest $5000 for 10% of his annual profits. This is something you need to work out between yourselves, depending on how much money he needs and how much you are willing to risk. I say risk because there is also the possibility that things may go badly and you could lose money.
Another possibility is your brother could form an S corp and give you a stake of shares of the business for an investment. I sold 2 20% stakes of my company and was able to raise around $20,000 to get started, while myself keeping the majority of shares. At the end of the year, if the company profited $100,000, shareholder A gets $20,000, shareholder B gets $20,000, and I get $60,000. You could negotiate the stake based on specifics to your business venture.
Out of curiosity, are you going to have the clothes made overseas? If so make sure you look into apparel quotas imposed by the US govt.