I’m attempting to start up a coffeehouse and want to maintain control of my venture, but don’t have the necessary capital saved up to begin operations. To make it simple, let’s say I have $5K saved, but need $50K to start up. If I raise the needed funds from various investors, is there a way to maintain single ownership? By default, if someone is willing to invest $10K into my venture, doesn’t that give them majority ownership? — Seth,Nevada
Response:
Not at all.
In fact, someone could lend you $10k and have zero ownership in the company–instead, they get a promissory note.
This is the essence of a loan.
Furthermore, ownership of the company is NOT necessarily proportional to capital invested. If these investors are passive investors, and you are actively running the business, it would make sense for you to have a greater ownership than just your proportion of capital.
I would first explore a setup where the investors are loaning you money, perhaps with a healthy interest rate and even a kicker based on profits.
There is no rule that says that you have to give up majority control in order to fund your business.
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