Hello, I'm going to invest in some young folks at my local

>give young folks money with the hopes they'll pay it back
>no binding contract

Hmmm

>>1162869
It's not like I care much about the 500, I mostly want to help them, but I'm all ear if you know how to set up a binding contract etc. Just sign a paper with peoples name, address and obligations, I guess

>>1162873
The point is, there's a reason why banks do a ton of background checks and have fuckhuge contracts when they lend money.

Furthermore, there are hella laws about money lending.

At worst, you're gonna look like a predatory lender when you actually have to get mean about getting your money back.
At best, you're giving away money to people who don't have the means or the inclination to pay it back.

>>1162879
Okay, thanks for your word of warning.
I'm over 10 years older than them, I don't totally mind if it doesn't work out, but I don't want them to drop their project for lacking a few hundred bucks for electronic parts.

So back to the question, what's a good procedure here?

First of all, definitely make some sort of contract so not only you but also them have some sort of legal security and safety net.
Even if you're best friends and trust each other, etc etc, DEFINITELY do it with a contract. Just some foundation that you can base any future discussion on. Make sure both parties understand all the parts of the contract.
Explicitly define what this is: Are you really just borrowing them money? Are you gifting it to them? Or is that some kind of investment?
Consider any what-if's: What if they sell rights for production? What if they sell the item to conditions that aren't morally acceptable to you? What if you demand them to sell the item to conditions that aren't morally acceptable to them?
For example, on the topic of software, can they open source it in the future?
If you have a lawyer friend, ask him about pitfalls (for both sides). Consider searching for contract templates.

Secondly
>10% returns
>what would be okay for you
Definitely implement some sort of upper limit (For example: 10% until they hit 10k profit, after that 5%, until 100k then nothing)

Consider again these questions:
>Are you really just borrowing them money? Are you gifting it to them? Or is that some kind of investment?
Under different hypothetical situations: what if they make a RIDICULOUS amount of money with this? Would you feel sour to just sit on your 1000€ returns? Would it feel wrong to you to get thousands from the 10% for doing nothing? What if they want to expand? Do you want to invest more money down the road? What if they go into debt? Would you feel obligated to help them pay it off?

It's not necessarily realistic, but answering these questions might help you realize your own positions better - what is it _really_ that you want from this?

>>1162889
To be honest, this is such a "personal" matter that it all depends on them as persons.

Do you trust them? Good, do it.

You do not? meh, it is only 500 EUR.

Do write something together and sign it. Even if it does not necessarily have a legal backing, everything will be clear.

Also run through some examples, like "ok, let us say you made -1000 EUR the first year, that is your loss, on second year you made 2500, 250 are mine", etc.

>>1162907
>Definitely implement some sort of upper limit
pardon my French, but, why in the name of flying fuck should he? Hes the investor, hes taking all the risks - does he have a stop loss limit on HIS losses, if the Kidz make nothing, and don't pay him back?

If it loses, OP seems OK with the prospect, and seems to be proceeding more on an altruistic basis anyway. But, if it wins? It wins for everyone, everyone happy, everyone shares the profits - esp the ones taking the most risk. Thats investment, thems the rules. They want to play business?, may as well start out on a halfway realistic basis IMO - draw you up a watertight contract for 3.5% Gross?
>t. Merchant.

So to conclude, I borrowed them 1100€ and if they make anything beyond that in a year, I get 10%.

Example:
If they make 4100€, I get 300€. And then my 1100€ back.
Leaving them with 2700€ and new equipment.

>>1163401


And if they don't pay you back?

>>1163420
In the unlikely case that they don't pay me back, I lost 1100€. I have a nice silicon valley job, I wouldn't notice.

>>1163427
It works for the community, they have to start somewhere.

>>1163427
Why do you feel lack of repayment is unlikely?

>>1163431
Because they work in a hackerspace 10 minutes from my flat and are known there. Also, they seem cool.

>>1163434
In other words, they know where you live and have an ample supply of power tools in a location nearby?

File: attitude.png (114KB, 816x679px) Image search: [Google]

114KB, 816x679px

>>1163448
wtf are we talking about?

You seem really dense about the idea that you shouldn't throw money at young and immature people who might not be able or inclinced to pay it back.
It's great that you want to support the maker movement and whatnot, but if you don't cover your ass, it will get fucked.

>>1163472
Am I talking to the same person or is everybody here paranoid over 1k?

>>>/biz/