I have been talking with a friend about helping her start a restaurant. She has a very good idea for a unique eatery in this area that we both believe would do well. There is a restaurant space we are eyeing that is in a perfect urban neighborhood location for this venture.
My partner is originally from North Africa and although she is very knowledgeable about the restaurant business from many years working in the US as a waitress and manager, she does not have a formal business background. Also, English is not her native language so she sometimes does not grasp the nuances of running a business. This is where I am helping her with the project.
We are preparing her business plan and I know that she has very little money to invest in the business. The space we are looking at right now is four bare walls and a concrete floor, so it will require a complete build-out. I do have some savings that I would not mind using to help her get off the ground. I don't necessarily want ownership in her business, preferring to help her out until she can get the concept up and running. Although I do believe it is a good concept and could eventually grow to other locations, or even franchise if she is lucky, and I would like to be a part of that growth. But that's for another discussion...
My immediate question is what are typical terms investors ask when putting in cash to kick-start a business? I don't want to ask too much of her and the business, especially when it is just starting out, but I would also like a decent return on my investment which is in relation with the risk I'll be taking with the money. Ideally I'd like to be out of the investment in a 3-5 year time frame, and maybe still hold a small residual of equity in the event the business does grow like we hope.
I know there are many smart people on this forum. Any thoughts are appreciated.
My partner is originally from North Africa and although she is very knowledgeable about the restaurant business from many years working in the US as a waitress and manager, she does not have a formal business background. Also, English is not her native language so she sometimes does not grasp the nuances of running a business. This is where I am helping her with the project.
We are preparing her business plan and I know that she has very little money to invest in the business. The space we are looking at right now is four bare walls and a concrete floor, so it will require a complete build-out. I do have some savings that I would not mind using to help her get off the ground. I don't necessarily want ownership in her business, preferring to help her out until she can get the concept up and running. Although I do believe it is a good concept and could eventually grow to other locations, or even franchise if she is lucky, and I would like to be a part of that growth. But that's for another discussion...
My immediate question is what are typical terms investors ask when putting in cash to kick-start a business? I don't want to ask too much of her and the business, especially when it is just starting out, but I would also like a decent return on my investment which is in relation with the risk I'll be taking with the money. Ideally I'd like to be out of the investment in a 3-5 year time frame, and maybe still hold a small residual of equity in the event the business does grow like we hope.
I know there are many smart people on this forum. Any thoughts are appreciated.
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