Jones is an entrepreneur. Jones has an idea for a cybersecurity company he wants to call MagicSoft and is seeking seed stage venture capital. PF Venture Partners tells Jones that it is interested and meet to discuss potential investment terms.

Jones proposes the following terms to PF venture partners:

PF would invest $10 million cash in a Delaware corporation that would be newly formed, treated for federal tax purposes as a C corporation, and called MagicSoft.

In return, PF Venture Partners would receive 40% of the common stock of MagicSoft. Jones would receive the remaining 60% of common shares immediately, in return purely for services and ideas that Jones would provide overtime to MagicSoft as an officer. Jones would provide the company with no cash or property in return for these shares.

Analyze and discuss the reasons why PF Venture partners might criticize Jones's proposed investment terms and an alternative investment structure that PF venture partners might propose to address those issues.

Your analysis should not address federal or state securities laws or regulations.