Re: Profit Sharing with Investors

Trying to compare effort against cash is awkward, to say the least. In
principle, I don't see why both shouldn't be rewarded with the same
type of compensation: equity. However, it would also be quite fair to
take your investors' money as convertible debt at a generous interest
rate, converting only when you default on payments badly or something,
if you're eager to keep your equity and think you can really do this.
Don't overestimate your business' ability to pay that.

$40k isn't much, but it sounds like that investors' risk is high. If
you'd be willing to secure that loan with personal collateral against
which there aren't other liens, then that presumably reduces their
risk.

You have a range of options. Fairness is largely in the eye of the
beholder. Think through your feelings on a range of options, then see
what you can negotiate such that everyone feels like they won. (-:
Equity, royalties, secured loan, whatever...

-- Mark