Re:Economic Pessimism Growing in U.S.
by mise_en_place on Tuesday May 31, 2022 @03:57PM
(#31574168)
I used those examples because they’re easy to understand. But how do you think angel investors like YC make money? An angel investment is also using leverage, banking on either future earnings or fundraising rounds to magnify your initial investment with a convertible note.
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That's not how it works. Angel investors and VC firms almost always purchase equity. It's not really possible to purchase pre-IPO stock on margin (although some wealthy investors can take out loans collateralized by their other assets, and then use that cash to invest in other opportunities).
Re:Economic Pessimism Growing in U.S.
by mise_en_place on Wednesday June 01, 2022 @03:10AM
(#31579022)
Really? I thought it’s better to defer valuation as late as possible, due to the regulatory burden and cost.
There's no regulatory burden. Pre-IPO equity funding rounds always involve some kind of valuation process and negotiation. The investor is purchasing a certain percentage of the company for a certain number of dollars.