Hello! We are starting a hostel in Cardiff, South Wales. Our premises is a grade II Victoria listed building right in the middle of all the main tourist attractions, we origianlly blew this idea off as the building would have been too expensive, but had advice regarding sourcing investments etc. I'll try to explain our business structure as easily as possible-
55% of the business is owned by my business partner and me
5% is ownded by the staff (so they see a financial return on their efforts)
40% is sold off to investors at £2000 for 1% of the business, the return for this is 40% per annum, meaning they have made back their original investment plus a little extra by the third anniversary. This 40% totals £80,000 of investment.
We thought finding investors was going to be the hardest part, but in reality it took less than a week to find just over £55,000- it seems people are fed up with savings accounts giving them nothing back. All of our investors are normal everyday people investing between £250 - £8000 so no high rolling millianaires just school friends, work friends and people we have met along the way.
Had I known we could go down this road, I would have set up a hostel years ago!
We did get a little help from the local authority who have agreed a grant on top of this sum.
Hope this helps!