There are many reasons to bring on a business partner when starting a company. You may find someone who has skills that you don’t possess, for example, and you realize that working together can make the business stronger. The two of you may even decide to share ownership and decision-making power 50-50.
But this is certainly not the only tactic that you can use. You may also be interested in bringing on a silent partner. What does this mean and what advantages does it give you?
They merely provide financial capital
A silent partner is someone who has been brought into the business and does own a share of that company. But the agreement doesn’t give them any power to make decisions for the business. Their role is just to provide money or capital for the business to function.
Not all investors are interested in doing this. Many of them want to know that they have a say in the company if they’re going to invest substantial money in that business.
But there are also investors who understand that the business has the best chance to thrive if the person who is running it is the absolute best person for the job. The investor may have the money to make the business possible, but that doesn’t mean that they know how to run the business or how to set it apart from the competition. They may agree to be a silent partner because they know the best chance to make money back on their investment is to let you run your company with their financial backing.
If you are setting something like this up, it’s very important to get all of the legal details correct so that everyone understands their roles and obligations.