What's your expected turnover and profit in year 1? Year 2? Year 3?
What is the probability of failure?
The following is really, really rough, so feel free to argue with it, but here's some thinking.
Suppose a VC expects, on average, to double their money over three years. Suppose you have a 10% chance of $2M profit over three years, a 60% chance of $100K profit over three years, a 20% chance of breaking even over three years, and a 10% chance of losing everything.
Your expected profit over three years is around $200K to $250K. That's twice what they invested, so they want 100% equity.
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What's your expected turnover and profit in year 1? Year 2? Year 3?
What is the probability of failure?
The following is really, really rough, so feel free to argue with it, but here's some thinking.
Suppose a VC expects, on average, to double their money over three years. Suppose you have a 10% chance of $2M profit over three years, a 60% chance of $100K profit over three years, a 20% chance of breaking even over three years, and a 10% chance of losing everything.
Your expected profit over three years is around $200K to $250K. That's twice what they invested, so they want 100% equity.
Now tell me where that's wrong.