I have read the answers on here and read a few books on the subject but I need more clarity. How would one pay back a investor?
Specifically, if I get an investor then how does he get his money? How do I satisfy that "loan"? Can I buy back the company from the investor at some point? Would I want to? I'm asking all of these questions to try and describe what I don't know how to ask.
Update Adding, do I have to sell my company? Investors talk about exit strategy. When is an investor happy? What if I do not want to sell? Is a venture capitalist or angel investor have different definition for being "satisfied"? I read many places on VC / Angel Network, that "Company A invested in in 2003, purchased by Company B in 2008. Company C invested in 2006, purchased by Company D in 2010."
I suppose I could ask the investors themselves before coming to an agreement. I appreciate knowing somewhat what's expected of me before hand as well.
Let's say you bought shares in Home Depot, making yourself an investor there. How do you get a return on that investment?
(1) Home Depot has a quarterly dividend, so you get money there.
(2) Over time, you hope the value of your shares go up, so you can make money when you sell them.
(3) It may be that Lowes will merge with Home Depot, and pay some money to each Home Depot stockholder, in which case you get that money. (Alternatively, they may give Lowes stock to each stockholder.)
Alternatively, you can lend money to Home Depot (by buying a bond), and get a regular stream of interest payments and a refund of your purchase price at the end of that stream.
Those are the two main ways, but there are various in-betweens that look a little bit like stock and a little bit like company debt.
UPDATE: In answer to the question posed in your update, recognize that investors are looking for a payoff at some point in the future. The standard ways are (1) an IPO (which is really unlikely) or (2) a merger or other acquisition with somebody either for cash or for tradeable public shares. You can also have a mandatory redemption clause: "If neither an IPO nor a merger occur before [Date], then the investor has the right to demand that the company redeem his shares for $X per share." ($X can be set in advance or based on the then-current fair market value of the stock.)