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If someone proposed a deal with me to control 60 percent of my company, and I had the remaining 40 percent, is that a good deal?

If someone proposed a deal with me to control 60% of my company and I had the remaining 40% is that a good deal considering my company not bringing in enough revenue? Included in the deal are resources to media equipment and business training to help me become a stronger salesmen.

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Jason Kanigan

Business Strategist & Conversion Expert

Do you want a job instead of to be an owner?

No way! Read "How To Get Rich" by the dear departed Felix Dennis, who did not have to sell a single copy of his book because he was already bloody rich. (Compare/contrast against so many other "gurus".) You'll read that he says not to give one single % of equity away.

Without 51%, you are no longer in control. If you want someone else telling you what you can and can't do with the company you created...if you want a job or worse because they can limit you to being a silent partner or consultant now that you are just a minority partner with a few rights...go ahead.

You can do this some other way.

Answered almost 7 years ago

Vasco Patricio

2x Co-founder; Operations consultant

I cringe at the cookie-cutter replies to this question. There is no right answer. It depends on the stage of your business and who the investor is.

If you're at seed stage and an individual angel investor is asking for 40%, sure, that is a deal breaker and you won't be "investible" afterwards as your cap table structure will be screwed. So that's a no, in principle. Even then, it's not a hard no. Do you really love your company and want to lead it during the next 10 years, or are you comfortable with answering to someone else and maybe even leaving after a few years? These are radically different situations. And even if you love your company, if you don't have a choice you might have to take the deal. But search for better terms from someone else first.

If, on the other hand, your company is bigger (Series B, Series C, etc) then it might be useful to bring in someone for a large chunk of equity - a venture capital, for example. Just be aware of the perils of this, which most founders aren't. Venture capitals are affected by whims (personal investor problems, need to give returns on a given year, and so many more random factors) and they will probably polarize your business model - they will try and force you to go for a billion-dollar exit with less chances than a reasonably profitable company - because their whole business model is based on that.

Give more info on the specific investors, your vertical, situation, financials and other terms you've obtained and I can give a more in-depth answer.

Answered almost 7 years ago

Amanda Wang

Product mkt fit, customer discovery & sales

I have been at C-level, as well as co-founded, founded, and advised many startups at various stages of their maturity cycle. What I have discovered (not just in startups) is a "good deal" depends on what you "really" want out of this deal. There's no quick answer to this and requires some examination of how you got to this situation and what you want to get out of it, both short and long term.

Is control of something that's not growing fast enough and needs more resources and expertise the key? Is the new equity investor bringing value that will increase the value of the entire company? And most important, what kind of partner do you want? Read the Founder's Dilemma, figure out what you want and then negotiate around that as equity/control and ownership aren't the only thing of value.

Separately, having done investment banking back in the day, there are lots of capital structures where you can maintain control whilst still bring in a partner.

Reach out if you need more advice.

Answered almost 7 years ago

Colleen Greene

Startups, Executive, Fortune Top 50 Executive

If you want to maintain control over your company then you must keep 51% of your company. It is really up to you and what you want out of the deal. It also depends on the stage of your company. I would highly recommend getting a very good lawyer to ensure you don't get screwed! I have seen this go bad for so many startups.

Answered almost 7 years ago