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04.07.2009 21:58:02

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What share do I need to offer an Investor?

Most commonly, the value of the company is the amount of investment times by the share in the business being offered. For example if you want to offer half the shares in the company for R1 000 000 investment, you need to show why your company will then be worth R 2 000 000. This may be easier said than done!

As someone new to the business world, your idea may be valued lower because on your own you are unlikely to have all the skills needed to run a successful business. However with a strong and experienced management team the value builds up quite quickly – so pick your colleagues wisely.

If you have a profitable, high growth idea with a brand, a real product or business process, trademark or patent and the infrastructure to go live, your value will be much higher. If you have all this and some satisfied customers then you are more likely to get a really good deal.

Of course Investors will make up their own minds about how much they think your business is worth and how much they are prepared to invest. This is where the negotiations really start! If you have a feasible idea you may have several interested Investors from which you could choose the most attractive offer. In addition you also need to consider issues such as expertise, contacts and business knowledge, especially in the area where you may lack.