Equity Investors and Venture Capital
How do I choose, equity or venture?
Venture capital is only one type of equity investment. Equity simply means you are selling a portion of your business, and a portion of your profits, to an investor for cash. The upside? You don’t owe it back, as you would with a loan. The downside? Until you buy that individual or equity firm out, they own a portion of your profits in perpetuity.
And not all equity is made the same. If your cousin or friend wants to go in with you, and they just want to provide cash to buy equipment, they can do that for a portion of your future earnings. On the other hand, an equity firm can guarantee your salary, but the return they expect is like taking a 58% loan on your business. Growth has do deliver, and when you take the money, your ultimate goal is to grow to the point of making a public offer. Of course, there are equity partners that are in between friends and relatives and the venture set.
How do I choose, equity or venture?
Venture capital is only one type of equity investment. Equity simply means you are selling a portion of your business, and a portion of your profits, to an investor for cash. The upside? You don’t owe it back, as you would with a loan. The downside? Until you buy that individual or equity firm out, they own a portion of your profits in perpetuity.
And not all equity is made the same. If your cousin or friend wants to go in with you, and they just want to provide cash to buy equipment, they can do that for a portion of your future earnings. On the other hand, an equity firm can guarantee your salary, but the return they expect is like taking a 58% loan on your business. Growth has do deliver, and when you take the money, your ultimate goal is to grow to the point of making a public offer. Of course, there are equity partners that are in between friends and relatives and the venture set.