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Entrepreneur Advice: Benefits of Partnership

When a man with a nine-year-old beard came into the Den looking to make a deal for his beard oil company, Michele Romanow initially said no to an investment opportunity. However, after Michael Wekerle proposed to partner up with Michele on a better Sussex Beard Oil deal, she couldn’t turn it down a second time. Here’s why:

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This is all about weighing out the benefits of a potential partnership. As discussed in earlier blogs sometimes there are hidden benefits to the potential deal on the table.

Determining if you want to give up extra equity (or royalty) will depend on how potential investor expertise is going to help you. So, the best way to figure out their hidden benefits is to figure out what you really need.

There’s a variety of things that you might need an investment for, some common investment needs are:

  • marketing/advertising
  • research & development
  • staffing
  • tooling/machinery
  • inventory

Make a list of what you need, and assign a dollar value (or equity value) to how much you’d be willing to spend to get more help in each area. For example, marketing help could be very valuable, whereas help in staffing might be less of a value-add.

It’s initially difficult to envision yourself lowering your valuation to bring in an investor, but if they’re going to be the reason your company’s growth goes from zero to sixty, that could actually help your valuation in the long run.

However, if they can only help accelerate your growth in an area you’re covered in, maybe it’s not worth the extra spend. Ultimately, you have to decide what’s right for your business.



Video: Michele Romanow explains why she accepted a deal after initially rejecting it.