Need tips for startup funds

Tabor88

I have a website idea that I`m having developed.  I have and attorney that is working with me for equity in the business, and I also have a really high-end web design company out of NYC that is interested in partnering to build the site.  They have offered to build my prototype site for a highly discounted rate in exchange for equity in the business and the guarantee that they will build the full-blown site once the actual funding is in place.  
My question is;I need to raise money to pay for my end of the prototype site to be built.  I`m looking for somewhere between 5-10k for the site and marketing funds.  Two of my best friends have parents with money who may be interested and I`m wondering what type of deal(s) I should / could offer them in exchange for funds? Thanks!MatthewTabor887/27/2008 2:25 PM

robertj

Matthew,
Normally, I would suggest that you discuss the detail of your "offer" with your attorney (if they are a qualified securities specialist) - but since he/she is also an owner there may be some parochial interest on his/her part.
Also, when you agreed to use equity as payment for services - you essentially established a "valuation" for your business - so you need to consider how that plays into your next deal.
Finally, $5-10K is a pretty small amount for a securities type deal (often called equity exchange) and I suspect you will probably need considerably more in the future - so you may want to consider some type of debt deal.
Has the business structure been put in place? 
 

Tabor88

Thanks for your reply Robert.
Yes, we will need considerably more funds in the future and we are still in the incorporation process.

robertj

If you are in process of incorporating then you haven`t consumated formal equity agreements with the attorney and web company?
 

JLove

Can`t you get a convertible loan (convert to equity at some point in time)?