Re:Tell HN: My startup is making money and I don't know what...
by sharemywin on Saturday June 28, 2014 @11:05PM
(#7960240)
If they are successful, they could lose 20%-40% equity in the business in their first round or two. If it becomes a 100M business that's 20M-40M. For a few million dollars. it's really expensive money, but doesn't necessarily make it a bad decision.
Credit card is one of the most expensive credits available. Economics 101. If you need a loan go to the manager and talk to them, this is cheaper.
"I'd say that at this stage of the game, paying some interest is probably much cheaper than giving up a stake of the business"
Any percentage of zero is zero. If the company goes down, it doesn't matter if you kept 80% or 50% or less, it is worth zero. 100% or zero is zero in the same way. Yes, people have to take care when selling equity, but investors are not only there for the money but also connections and advice.