Startup Funding Espresso -- Selling Equity to Family and Friends
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. Many startups use equity to fund their business.\xa0 Equity is an ownership stake in a company.\xa0 Equity aligns everyone\u2019s interest in the startup. It preserves cash since it\u2019s only paid upon the exit of the business, which is usually an acquisition by another company. Startup valuations are noted in pre and post-money figures and helps determine the investors\u2019 equity ownership. Pre-money -- what the company is worth before the investment Investment -- how much the investors are putting in Post-money -- pre-money plus investment Investors own an equity percentage equal to the investment, divided by the post-money. You can also calculate ownership by using share prices.\xa0\xa0 The share register of the startup should log how many shares have been issued to investors and other stakeholders.\xa0 To determine your percentage ownership for your startup, divide the number of shares you own by the total shares issued. You can ignore authorized shares for now. There are preferred shares and there are common shares \u201cPreferred\u201d means that the holder receives certain rights or preferences with their shares. These rights provide the preferred shareholder protections, such as getting paid back first before common stock shareholders. Common shares come with no special rights. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.Let\u2019s go startup something today.-----For more episodes from Investor Connect, please visit the site at: Check out our other podcasts here: For Investors check out: For Startups check out: For eGuides check out: For upcoming Events, check out For Feedback please contact info@tencapital.group