Understanding what you're genuinely giving up, and what it's worth
Someone wants to invest in your business — real capital, genuinely useful, potentially a turning point.
Before you get to yes, there's a specific set of financial questions worth answering honestly — because an investor doesn't just bring money in. They bring an ongoing relationship with real financial consequences.
The short answer
Bringing in an investor often means giving up ownership or granting future or economic rights, depending on the investment structure — and usually some degree of influence — in exchange for capital. Before agreeing to anything, it's worth understanding exactly what you're giving up, what it's genuinely worth, and what the investor will expect in return, both financially and in terms of involvement in running the business.
The core financial questions to work through
How is the business actually being valued? The percentage of the business an investor receives for their money depends entirely on what the whole business is deemed worth — a question covered in detail in its own valuation guide, and one worth getting an independent view on, not just accepting the investor's number.
What exactly are they investing in return for? Straightforward equity (a genuine ownership share), or something more structured — preference shares, a convertible note, or terms that give them priority in certain circumstances?
What level of involvement or control comes with the investment? Board seats, veto rights over major decisions, reporting requirements — investment often comes with genuine ongoing obligations, not just a cheque.
What's their expected return, and over what timeframe? Understanding whether they're expecting dividends, a future sale, or another exit event shapes how the relationship will actually run.
What happens if the business needs more capital later? Will the investor be expected, or entitled, to contribute again — and what happens to ownership proportions if they don't?
What happens if you disagree? On strategy, on spending, on the direction of the business — whose view prevails, and under what process?
Why the valuation conversation deserves particular care
A lower valuation means giving away a larger share of the business for the same amount of capital. It's genuinely worth having your own, independent view of what the business is worth — based on real numbers, not just accepting the figure an investor proposes, however reasonable it sounds in the moment.
What investors will typically want to see
Reliable, properly prepared financial statements — not just a bank balance and a general sense of how things are going.
A credible business plan and financial projections, tested against realistic assumptions.
Clean, well-documented company or trust records — anything messy here tends to raise more questions than it answers.
A clear understanding of your own numbers — margin, cash flow, growth trajectory — presented confidently and accurately.
Why the ongoing relationship matters as much as the initial deal
An investor is rarely a one-time transaction — they typically become an ongoing part of the business's financial and governance structure, with reporting expectations, meeting rights, and a genuine interest in decisions well beyond the day the money arrives. It's worth being honest with yourself about whether you actually want that kind of ongoing relationship, not just the capital that comes with it.
A quick self-check
Do I have an independent view of what my business is genuinely worth, separate from the investor's proposed figure?
Do I understand exactly what rights and control I'd be giving up, not just the percentage of ownership?
Have I thought through what happens if we disagree on a major decision down the track?
Are my financial records and reporting genuinely ready for the scrutiny an investor will bring?
When should you get professional help?
you're negotiating with a prospective investor and want an independent valuation before agreeing to terms;
you want the investment structure — equity, convertible note, preference shares — explained and compared properly;
you want your financial records and reporting brought up to the standard an investor will expect; or
you want the shareholder or investment agreement reviewed before signing.
Continue learning
→ Should I Bring a Business Partner or Shareholder Into My Business?
→ How Is a Small Business Valued — and What Actually Makes It More Valuable?
→ When Does a Small Business Need Management Reporting?
SKC Accounting | Knowledge Centre | Knowledge Guide 080
Last reviewed: August 2026
General information only. This guide does not take into account your individual circumstances and is not a substitute for professional accounting, taxation, legal or financial advice.