Starting a business can potentially require having or raising a lot of money. Whether it's designing prototypes of a product, renting a space for an office, or buying the technology to run it, there are a lot of costs that you incur before you even officially open up shop. Quite often, when looking at new businesses to invest in, banks and other investors might not want to risk investing in a brand-new company. This is where family and friends funding can be very beneficial and can make sure that you get your business off the ground without as much strain on your own bank account. In general, friends and family funding is a type of crowdfunding where you raise small amounts of money from family members or friends to raise a more significant total amount from other investors. Family and friends funding gives the investor peace of mind because they are investing in someone that they have a personal relationship with, so they are confident in the person and the business that they are investing in.
Waterfall provisions, also known as waterfalls, allow LLC members to decide how to allocate distributions among investors. While many members usually create an operating agreement that allocates distributions in proportion to the amount of investment an investor made, there are other ways a company can make distributions.
If you just formed an LLC, or are looking to do so, contact an experienced Newburn Law attorney today to learn more about what you should include in your operating agreement and what issues you might initially be overlooking.
A good business partnership is like a marriage. You choose your partner(s) for a reason. Transfer restrictions represent your only defense to ended up with a partner you didn't select. However, transfer restrictions can also limit your ability to sell your interests in the business. Contact an experienced Newburn Law attorney to help you balance these needs and ensure the long-term success of your business.