How to think about this real life VC scenario
Let's say you have a friend who approaches you asking for some money to start his small business (ie: pharmacy store that your friend will be running as the head pharmacist or whatever). You both project revenue to be $1mm per year, with $400k per year in cash flow (after paying for all employees except your friend). The startup cost will be $2mm.
He asks for you to contribute as much as you want, preferably the whole $2mm cost. What terms would you agree to? What stake of the pharmacy would you own, and how much of the $2mm would you pay?