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Thread: Sweat Equity

  1. #1
    SitePoint Enthusiast
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    Has anyone out there ever set up a sweat-equity deal? In other words, you partner with someone who has skills you need in exchange for part ownership in the site? What's the most common form of this? Were the legal fees expensive? How did it work out? Thanks!

  2. #2
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    I'm currently under a similar plan.
    basically a silent investor has given me money, and I work to build this ebusiness.

    these deals can be good and bad. For the most part the investor expects a very large part of the company %. and there will be times that they are being very demanding in relation to the money they have invested.

    as far as common form, i don't know.

    Legal fees...I would suggest to ask advice from an attorney to write up a contract.

    with my business the investor has given us about $20,000 and has 45% stake in my company. I plan on finding angel investors soon, and I will dilute the stake of my first investor. maybe (angel-40%, investor-20%, me-40%) and then after a series of capital funding everyone's investment share will decrease, but may increase in value.(angel-15%, investor-5%, me-10%). then there's IPO...whoooo-hoooo! CHA-CHING! that's when young 20 year-olds like me become millionaires.

    sorry, eh-hem. i got excited.


    hope it works out.


    - Sam

  3. #3
    SitePoint Guru phanie12.geo's Avatar
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    What exactly is an IPO, please?

    Stephanie

  4. #4
    SitePoint Wizard
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    An IPO is when a company first offers their stock to the public through a market (NYSE) or an index (NASDAQ).

    An 'angel' is the investor in the first round of venture capital (VC) investments. These people are sometimes relatives. The money that they give the companies is usually the first start and they, if the stock is successful, can become successful too if they have a good share in the company.

    Not bad for someone who's only 12, eh?

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  5. #5
    SitePoint Guru phanie12.geo's Avatar
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    You must be gifted. Thank you.

    Stephanie

  6. #6
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    try www.score.org for business advice.


    it's free!


    - sam

    [This message has been edited by DLG (edited April 17, 2000).]


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