Why shouldn’t companies use equity for working capital requirements?

Companies requiring funds can categorize all their requirements essentially into two buckets, debt financing and equity financing. Typically, debt financing involves borrowing funds from a bank or from the general public by issuing bonds. Equity financing includes selling shares of stock or taking on additional owners. The one common mistake entrepreneurs make is thinking that these …

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Sole Proprietorship vs. Partnership vs. Corporate vs. Limited Liability Company – Various ways of forming a business organization

How Do Investors Decide – How Much Equity They Need, How Many Shares To Issue, How To Price The Share?

Ignore the first two slides if you're unaware of the methods.

Startup Valuations – How is a value of a startup calculated?

Common Stock vs. Preferred Stock

Stock represents the equity ownership of a company. In the startup world, there are two types of stock broadly: common stock and preferred stock. Common stock is usually something is given in exchange for your effort (sweat stock) whereas preferred stock is something that is given in exchange of the money that you invest in …

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Different ways to create value – product, dollar, speed, convenience

Traditionally, they say there are four ways of creating value: Product Cost/Price Speed Convenience Entrepreneur magazine says that there are three ways of creating value - Price, Quality and Speed. Remember the days when places like printing companies and auto body shops posted cartoons that showed an employee laughing hysterically, accompanied by a line like, "You …

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Vesting of Founder’s Stock

This is a post written by George Deeb and the link to the original article is here. Founders of a startup are frequently surprised when venture capital firms or other investors ask for vesting provisions to be placed on the founders’ stock.  The investors are seeking to provide sufficient incentive for each founder to work …

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