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The 10 Best Sources of Cash to Start Your Business

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This source often gets overlooked, but it should be a major focus these days due to government initiatives on alternative energy and technology. An investment from a venture capital firm is usually expensive, in equity and control. Bartering services for equity. Small business grants. Startup incubators.

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Do Venture Capitalists care how the equity is split among the founders?

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People who tell you that VCs won’t look at a company with an even equity split are being silly. Realistically, if a company is jointly governed by two people who have exactly equal say, it is quite possible that if there is a major disagreement the company will implode because it will not be able to take action.

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Do It Right The First Time: Avoiding “Janitorial” Legal Work

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Notice what is missing from this list of priorities: The company itself – that is, a business entity, most often a corporation , that will own the entire business (however defined), issue equity to founders, take investment capital , enter into contracts, make sales, pay employees and contractors, and so forth.

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The Funding Gap

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Government Grants. $3 US Government. The following table shows these sources: CAPITAL SOURCES. ANNUAL US $$$. TYPICAL STAGE OF DEVELOPMENT. Friends and Family (F&F). $50 50 billion. GEM Studies. Idea, pre-seed, startup. Pre-seed, startup. Angel Investors. $20 20 billion. Center for Venture Research. Super Angels. Estimate.

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Don’t Forget Grants If You Need Early Seed Money

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A grant is not an equity investment, so the entrepreneur doesn’t have to give up a stake in the company either. Since government grants are funded by tax dollars for specific industries and research, usage of grant funds is carefully monitored. Stringent spending controls. Extend your networking.

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Do It Right The First Time, Part II: Visit the Doctor or House Call?

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Likewise, founders can benefit from understanding basic characteristics of the overall legal structure, formation and governance documents, rights and responsibilities of team members, etc. Stepping off the soapbox, let’s examine the highest level “To Do” list for a new startup: Formation, Governance and Equity. Newco, Inc.”)

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Second-Class Investor Citizens: Facebook’s IPO and Dual-Class Equity Structures

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As a quick review, most startups begin life as corporations with a single class of equity securities, referred to as Common Stock , issued to founders, employees, and outside service providers. Options and warrants, when issued, are also typically exercisable for shares of Common Stock.

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