Is equity investment right for your start-up?Categories:
The main focus of MyCleverHub is to support start-ups through our Entrepreneur Incubator and Accelerator Programme. MyCleverHub requires an equity stake in each business dependent on the level of support needed. This way we are all aligned to the progress and success of the businesses. By leveraging the entrepreneur’s ideas and the MyCleverHub team’s proven track record, the entrepreneur’s risk is lowered and they are more likely to achieve success in a far shorter period of time.
Why should I raise investment in return for an equity stake in my start-up?
As an entrepreneur aiming to grow and scale your business, you’ll need to raise investment, and doing it single-handedly whilst retaining 100% of your business might prove to be difficult.
Not only that, as important as raising capital is, an influx of expertise from people with varying levels of experience will also be vital to help you achieve your goals.
For start-ups that are unique, scalable and in which MyCleverHub provide a cash investment, we’ll typically require a 10-26% equity stake dependent on the level of support required.
Rather than think of it as giving away a minority share of your business, look upon an equity stake as an injection of investment, services, support and expertise, then ask yourself, is 90% of something worth more than 100% of nothing?
Does giving up equity mean I’ll lose control of my business?
The short answer is no. When you prepare to scale up your business, you’re connecting with strategic partners who can offer valuable investment, expertise and a new network of connections.
Rest assured that if you release a minority stake in your business, you will remain as the majority shareholder. A majority shareholder is an individual who owns and controls more than 50% of a company’s shares and typically has more influence than all of the other shareholders combined.
What else do I need to consider when giving away equity?
When giving away equity in your business you’ll need a Shareholder’s Agreement which is a mutually agreeable legal document where you can define important company decisions such as hiring new staff, spending limits, dividend and share distribution. Highlighting which key decisions will need the input of all Directors can help you to keep control whilst having tactical partners around you to sound check your decisions and lead your start-up to success.
Making the correct early business decisions is important, so there is nothing wrong with taking a cautious approach with an understanding that eventually, giving away a proportion of your business is necessary to scale-up your start-up.
In addition to our equity-based entrepreneur Incubator & Accelerator, MyCleverHub also offers a range of start-up support services. To find out more visit www.mycleverhub.com