We were toying with looking for some angel investment, and about eight weeks ago were introduced to a local angel investor. After a a few meetings and lunches he came up with the following offer:
- Investor puts in £200k in return for 20% of the company. Rather more than I wanted to part with but OK as a starting point for negotiation.
- Investor promises to help drive company growth as he has contacts and experience, wants to be involved. Not ideal as we have no idea how he'd perform - in a two-man startup we can't carry a third person who wants to help.
- Investor requires the company to pay him back the £200k at 12% interest rate, personal guarantees no doubt required but I didn't stick around long enough to ask.
The reason the offer was interesting was the light in which it showed the investor. To make such a bizarre offer (basically, to lend us money at a crazy rate, and in addition to demand a large chunk of the company in return for the unproven value he said he could add) made me ask: what would he be like to deal with on a day-to-day basis?
We walked away.
What other crazy offers have startup founders seen?
