Restaurant Equity Partners


2

I am seeking equity partners to invest in my restaurant. I am wondering how I can propose a deal where I would be able to keep majority ownership while not being able to put up more than 10% of the start up capital.

Equity

asked May 9 '11 at 05:04
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Ryan
11 points

2 Answers


2

I don't know a lot about you -- or your business experience -- or your industry reputation -- but I am going to propose to you that it is extraordinarily unrealistic to expect to secure 90% of the launch capital for your restaurant as equity without selling a majority of the equity.

As @David Feyereisen said you will need to fully document the pre-money valuation of the business, and all of the value that you bring to the table as being worth 9x the dollars that the prospective investors will be bring. This documentation will need to be not for your eyes -- but sufficient to convince the prospective investor. I expect that this will be very challenging.

Restaurants are notorious risky investments. There are well know chefs that bring with them a track record, built in marketing equity and "fan bases" of customers struggling to finance their next restaurant.

More likely, the way that you will be able to maintain a majority ownership position is not to seek equity partners to invest in your restaurant, but to combine multiple sources of financing. The traditional restaurant financing packages will include: personal loans, equipment financing, SBA financing. There will be different sources of financing for the different components of your business as well -- equipment, location, operating, and marketing.

There is always creative strategies as well. Leveraging the crowd sourcing model you could create meal packages and pre-sell them to a built in customer base which is part of your pre-existing community. Best of luck!

answered May 9 '11 at 22:11
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Joseph Barisonzi
12,141 points

0

You need to be able to describe all the other things you are investing other than money. Things like working for a lower salary than you would charge a typical employer PLUS your menu, your design, your expertise, your contacts, your suppliers, your marketing, etc...

Good luck.

answered May 9 '11 at 10:24
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Dave Feyereisen
963 points

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