Came across an opportunity to invest in a start up that has the product build, customer list, deposits down etc. My investment of $10k would earn me equity as well as monthly profit sharing. I'm a bit thrown off by offering both. I believe it's just a way to incentivize the investment. But wanted to hear some thoughts. thanks!
Does a start up offering equity AND profit sharing make sense?
byu/AceGuy347 ininvesting
Posted by AceGuy347
5 Comments
Do you have info about other investors
My employer offers me both equity in the form of shares as well as profit sharing in the form of dividends on those shares
If it’s a startup I wouldn’t want them burning cash on profit sharing. That’s hinting at desperation
A startup has $0 profits and most likely will have $0 in profits for a really long time as all profits will / should get reinvested to grow the business. I would be really leery of that type of deal.
Perhaps in the long run, both will be viable for both the startup and the investors. For now, equity can be deemed the best option.