My answer to I’m not comfortable giving someone a high equity stake just for a connection. Can I reduce his equity …
Answer by Raad Ahmed:
I concur with the other answers the terms of this deal are rotten, and I am also afraid that this is something that you would not want to become anchored to even if the other party was amenable to negotiating terms down the road.
Firstly, not to sound too terribly negative, but if the “broker” wants 20% (an obscene offer given the norm of 5% suggested by another poster) it is not likely the broker will deviate from this “sweet deal” he or she is proposing therefore as suggested by others perhaps it’s time to walk and live to fight another day. Which leads me to my next point perhaps it may be time to rethink how either the concept you are pitching, the manner you are pitching it or even the audience you are pitching it to.
Perhaps this experience could serve as a time to reflect on why you could be attracting such a rotten proposal. Then again this experience could be marked up to the fact you are pressed for funding and it’s a matter of not being able to thoroughly solicit investors.
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