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Posted about 4 years ago

The Only Time to Consider Investing in a Start-up

The only time you may consider putting your hard-earned money in anything other than real estate is when there is a pending purchase order placed by a large reputable organization for products that a small start-up company is unable to fulfill due to shortage of cash.

Large conglomerates like Home Depot, Walmart, Costco, etc. may be interested in placing orders for new products and may pay for these orders in cash (on delivery) or based on the sales results.

When such an opportunity presents itself, your risk as an angel investor or a funder is reduced tremendously, because of the increased chance of success with a large company that has huge exposure and several distribution channels.

My role as a Consultant for Angel Investors involves the assistance in negotiating and developing the contract agreements with my clients’ attorney and three parties:

  • 1. The entrepreneurs who created the product (owners of the start up company)
  • 2. The manufacturer who will produce the product based on certain specifications (and within a specific time frame)
  • 3. The national company that is placing the order (And the terms of payments)

The structure then becomes either a bridge loan secured by the products and the actual purchase order.

Or it could be an equity partnership with the start-up company.

Or even a licensing agreement with the manufacturer.

There are many variations to structure a profitable deal with the parties including some debt financing and some equity position with a residual stream of long-term income.

Whether you are an investors seeking such short term opportunities or you are a creative start up entrepreneur seeking to structure the bridge financing to fulfil your pending orders, we could provide consultation and offer creative win/win negotiation that magnify the opportunities for all involved. You could reach us at: [email protected].

Wishing you growth and success,

Cherif Medawar

www.GBACorp.com



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