HN Explorer

Ask HN: How do you deal with ownership with investors?

2 points by obituary_latte ↗ HN
If you are looking for capital or a merger/acquisition, how do you deal with ownership when there are investors?

E.g. if you are looking to sell a company, but retain some percentage of ownership, how do you make investors comfortable with you owning 2% of a $1MM company at closing and then owning 2% of a company that someone invests $5MM in then selling your 2% at that $5MM valuation? Is there some mechanism that protects investors in a situation like this?

(If there is a better way to phrase this question, I’m all ears as well)

2 comments

[ 3.4 ms ] story [ 15.6 ms ] thread
verdverm
This sounds like a very unusual transaction. Is this what you are hoping for or do you have an investor actually pondering this?
obituary_latte
Have an investor pondering this. It's maybe just sounding unusual because of the way I'm asking.

They are conveying concerns about how to transfer/give ownership in the new company because their argument is that it wouldn't be fair to an investor to invest some large sum which then, for instance, I turn around and sell my 2% at a larger valuation due to their investment.