Loading...
Answers
MenuCan a parent company have 2 different online businesses raise funds simultaneously from different investors?
Assume company X has 2 online businesses abc.com and xyz.com. Can both these portals raise funds? How could this affect the parent company's stake?
Any examples you can share.
Answers
You can raise money for 2 online businesses with the same parent at the same time. The term sheet and closing documents need to be crystal clear regarding the ownership and rights. If the parent company pays compensation for any of the employees that work on the 2 online businesses, a management agreement may make sense to outline the percentage of time allocation.
I have seen this arrangement in many situations and the "if" - compensation - is one of many "ifs", you should think through when deciding if you should raise money with the existing legal entities or set up new one(s).
You do need to make certain the arrangement is transparent and clear to all or disputes can slow the progress of the business. Please feel free to schedule a call if you would like to discuss the arrangement you have in mind.
In your case, X will raise funds not abc.com and xyz.com as the portals are under the company X. You may raise funds from two investors, however, you need to:
1. Either, raise in two separate rounds
2. Or, club both the investors in same round
For understanding in detail, fee free to setup a call.
Related Questions
-
How to raise money for a hardware startup that needs money upfront to even produce a prototype?
Have you considered crowdfunding? Investment grants will be able to take care of funding but crowdfunding has the benefit of taking care of funding and providing a customer base.There are many examples of teams without a fully working prototype being successful on these platforms. Kickstarter will be off the table but you have some great options with Indiegogo (https://www.indiegogo.com/) and the Brazil specific network Catarse (http://catarse.me/en) Of course, you will have to focus on things like presenting your story and getting attention for a bit but if you are successful you will have money for a prototype, access to a customer base and exposure that could bring some helpful people onto your team - even the angels and VCs you'll need to get to the next level. Message me if you need some help - I'm not personally an expert in crowdfunding but I can connect you with some of the best in the business.JR
-
How do I grow from a one man startup when I don't have the money to hire & don't have skills or time for investors?
Stop thinking you don't have the skills to do something. You can learn anything if you decide to, but assuming up front that you can't (forever) is dangerous. my2centsDM
-
What are the best books to learn about Leveraged Buyouts and other creative financing topics?
If you want information that matters in "Creative Financing Techniques" find a person with the experience/insight. Most of what is in books is dated. Many of the more creative methods are a function of current tax code and market factors (like QE).CW
-
When raising money how much of equity do you give up to keep control? Is it more important to control the board or majority of shares?
It entirely depends on the kind of business you have. If you have a tech startup for example, there are pretty reliable assumptions about each round of funding. And a business plan and financial forecasts are almost totally irrelevant to sophisticated tech investors in the early stages of a company's life. Recent financial history is important if the company is already generating revenue and in that case, a twelve-month projection is also meaningful, but pre-revenue, financial forecasts in tech startups mean nothing. You shouldn't give up more than 10-15% for your first $100,000 and from that point forward, you should budget between 10-20% dilution per each round of subsequent dilution. In a tech startup, you should be more nervous about dilution than control. The reality of it is that until at least a meaningful amount of traction is reached, no one is likely to care about taking control of the venture. If the founding team screws-up, it's likely that there will be very little energy from anyone else in trying to take-over and fix those problems. Kevin is correct in that the board is elected by shareholders but, a board exerts a lot of influence on a company as time goes-on. So board seats shouldn't be given lightly. A single bad or ineffective board member can wreak havoc on a company, especially in the early stages of a company's life. In companies outside of tech, you're likely going to be dealing with valuations that are far lower, thus likely to be impacted with greater dilution and also potentially far more restrictive and onerous investment terms. If your company is a tech company, I'm happy to talk to you about the financing process. I am a startup entrepreneur who has recently raised angel and VC capital and was also formerly a VC as part of a $500,000,000 investment fund investing in every stage of tech and education companies.TW
-
What percentage of VC funded startups make it to 100m+ revenues in 5 years or less?
100M+ in revenues in 5 years or less does not happen very often. As an example of one sector, here is an interesting data visualization (circa 2008) of the 100 largest publically traded software companies at that time that shows their actual revenue ramp-ups from SEC filings (only 4 out of these 100 successful companies managed this feat, which themselves are an extremely small percentage of all of the VC-funded software companies): How Long Does it Take to Build a Technology Empire? http://ipo-dashboards.com/wordpress/2009/08/how-long-does-it-take-to-build-a-technology-empire/ Key findings excerpted from the link above: "Only 28% of the nation’s most successful public software empires were rocketships. I’ve defined a rocket ship as a company that reached $50 million in annual sales in 6 years or less (this is the type of growth that typically appears in VC-funded business plans). A hot shot reaches $50m in 7 to 12 years. A slow burner takes 13 years or more. Interestingly, 50% of these companies took 9 or more years to reach $50m in revenue."MB
the startups.com platform
Copyright © 2025 Startups.com. All rights reserved.