An investment suitable to entrepreneurs sometimes involves commingling of funds. How do these commingling deals usually work?
Each participant is an individual investor. Those individual investors will interact with the entrepreneurs, and each investor will be supplied equity in the venture proportional to the money each invested. The investors do not invest as a pool, as a venture capital partnership does. They do conduct individual transactions. But each investor’s share of equity has to be measured against the venture’s valuation. Of consequence is the share of equity each receives among all the parties, because any instance of inequality could spell trouble later on.
