Trying to Calculate % for investor

[nmnir]

Hello,

I'm trying to find investment for my small startup. There are contracts with clients but those are long term projects (18-24 months for completion). So the ROI will be 300% but it will take about three years.

Is there some finger role to calculate how much shares investor should recieve?

Thanks,
Nahum

 

[editec]

Not enough data to know what a fair share is in this case.

But here's one approach...

How much has been invested to date? (I)

How much remains to be invested? (fI)

fI
I + fI
= % total shares​

 

[nmnir]

Indeed not a lot of because I wanted a formula.

Your formula do not consider the added value that the first money brought (the I).
Also investors asking about future income in the current year. My problem is that my current contracts will start being really profitable in two years.

Any extensions to the formula?

 

[JimmieD]

Hello,

I'm trying to find investment for my small startup. There are contracts with clients but those are long term projects (18-24 months for completion). So the ROI will be 300% but it will take about three years.

An ROI of 300% after 3 years? I have a bridge to sell you.

Are you saying that the ROI will be 100% for 3 years or 300% in the 3rd year?

Is there some finger role to calculate how much shares investor should recieve?

You're having trouble with this but you can calculate that ROI will be 300%?

How much money do you plan to raise? What percentage do you plan to keep? The number of shares is irrelevant. What really matters is the equity % in the startup. If I have only 2 shares of your startup, but you only issue 3 shares, then I have 66% ownership. However, if you issue 100 and I have 2, then I have a 2% ownership. As long as a person is acting rationally, they would pay more for the greater % of ownership.

Also investors asking about future income in the current year. My problem is that my current contracts will start being really profitable in two years.

Then your projected income this year and next year is < $0. How do you get an ROI of 300%, but no actual profit until the 3rd year? All the sudden in the 3rd year, the return on initial investment is going to explode? How much money do you anticipate losing for the first 2 years?

A prudent person will use something like a discounted cash flow method to calculate the viability of an investment. And your cash flow for years 1 and 2 appears to be negative.

 

[nmnir]

I have signed contracts with clients. We are going to develope new products so that is why it is going to explode. I meant 300% - three times the investment. Maybe I exaggerated in the length of the project....

So far 100K was invested, I'm looking for 500-600K and the partners are strong companies with marketing abilities.

I'm not having trouble calculating the ROI, I need a formula that will include the ROI in the "how many shares the investor should get" formula.

Cash flow for first year may be negative and this is precisely my problem.

Nahum