My Uncle Offered $50,000. What Percentage of My Company Is Fair?

The percentage is not a number you pick; it falls out of the valuation. An investment buys its amount divided by the post-money value of the company: $50,000 into a company worth $1 million before the money ("pre-money") buys about 4.8%; at $2 million pre-money, about 2.4%; at $500,000, about 9.1%. So the real question is what your company is worth today, and the fair answer is a valuation you can defend in one sentence, offered on the same terms to everyone in the round, usually at a modest discount to what later outside investors will pay. If you cannot defend a valuation yet, a loan, a revenue share or a SAFE with a cap may be a fairer structure.

By Joel Arberman, founder of Prepared to Raise · 17 companies taken public, 30+ private placements prepared · Reviewed October 21, 2026

The math

Percentage owned = investment ÷ (pre-money valuation + investment).

  • $500,000 pre-money: $50,000 ÷ $550,000 = about 9.1%.
  • $1,000,000 pre-money: $50,000 ÷ $1,050,000 = about 4.8%.
  • $2,000,000 pre-money: $50,000 ÷ $2,050,000 = about 2.4%.
  • $4,000,000 pre-money: $50,000 ÷ $4,050,000 = about 1.2%.

If your uncle is one of several investors in the same round, use the total raise: $500,000 raised at $2,000,000 pre-money means the round owns 20% and your uncle owns his tenth of that, 2%.

How to arrive at a valuation you can defend

  • Revenue or cash-flow businesses: start from what similar private businesses sell for, often a multiple of annual cash flow (EBITDA) or revenue for your industry, and discount it for size and risk.
  • Pre-revenue companies: valuation is negotiated, not calculated. Anchor it to comparable early-stage rounds, the progress you have made, and how much of the company you can give up across this round and the next without losing control.
  • A prior round: if you have sold shares before, that price is the starting point; going lower needs an explanation.

Whatever you choose, state it in one sentence, for example "We are pricing at $2 million, about three times this year's cash flow, below what comparable businesses sell for." If you cannot, the number is probably too high.

What "fair" means with family

  • Same terms for everyone in the round. If your uncle and a college friend both invest this month, they buy at the same price. Side deals cause family arguments later.
  • A reward for going first. Early money takes more risk. It is common for a friends-and-family round to price below what outside investors will pay in the next round, so early supporters see that reflected.
  • Not so cheap it hurts the company. Giving away 20% for $50,000 makes the next raise harder and may leave you without enough ownership to stay motivated.
  • Remember: more dilutive than what? A slightly lower valuation that gets the round done is better than a higher one that never closes.

Alternatives to selling a percentage

  • A loan. Repaid with interest at or above the IRS applicable federal rate. No ownership changes hands, but the company must repay it whether or not it succeeds.
  • A revenue share. Your uncle receives a percentage of revenue until he has received an agreed multiple of his money. Suits businesses with steady revenue and no plan to sell.
  • A SAFE or convertible note. Defers the valuation until a later priced round, with a cap that protects early investors. $50,000 on a SAFE with a $3 million post-money cap converts into at least 1.67% of the company. Best if you expect to raise venture or angel money later.
  • Preferred stock with a dividend. Suits a cash-flow business: your uncle gets priority and a fixed return, and common shareholders are not diluted as much.

Do not skip the paperwork

Your uncle's $50,000 is a securities sale. It needs a written agreement, an investor questionnaire, an updated cap table or operating agreement, and usually a Form D and a state notice filing. Why there is no friends-and-family exemption.

Related questions

Should I give him a board seat?

Not for $50,000. Offer regular written updates instead, quarterly at minimum.

What if the company fails?

Equity is not repaid. Say so plainly before he invests, and do not take money he cannot afford to lose.

Can I buy his shares back later?

Yes, if you agree a buyback right and price formula in advance. Agreeing it later is harder.

Is an LLC different?

The math is the same, but he receives membership units and a K-1 each year, and the operating agreement needs amending.

Where to start

Setting the valuation and terms is the core of our Network Raise package, a fixed $15,000 for a raise of up to $1 million from people who know you. A Readiness Assessment ($1,500, credited within 60 days) starts with exactly this question.

Prepared to Raise is a service of Meraki Partners, LLC. This article is general information, not legal, tax or investment advice, and not an offer to sell or a solicitation to buy any security. Meraki Partners is not a broker-dealer, funding portal, investment adviser or law firm.