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Three Startup Financing Myths You Should Avoid

YoungUpstarts

If you are building a startup, you’ll find no shortage of people who are willing to give you advice, particularly when it comes to raising financing. Here are three pieces of advice that are tossed around Silicon Valley as if they are gospel, but they are really Startup Myths. Unfortunately, much of this advice is wrong.

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Why Uber is The Revenge of the Founders

Steve Blank

To turn your company’s stock into cash, you engaged a top-notch investment bank (Morgan Stanley, Goldman Sachs) and/or their Silicon Valley compatriots (Hambrecht & Quist, Montgomery Securities, Robertson Stephens). A 20th century VC was likely to have an MBA or finance background. 4. Founder-friendly VCs.

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Who Should be on Your Startup Board?

Both Sides of the Table

If angel investors are pressuring you to set up a board and if you don’t have the leverage to push back a little then I might suggest a 3-person board in which all 3 seats are appointed by the common stock and you agree to appoint one of these seats to the angel investor but perhaps make it either time based or event based.

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Cash-strapped? How to pay for services with your startup’s equity

The Next Web

From Silicon Valley to Peoria, Illinois, cash-strapped startups look for inventive way to finance their business – often handing out equity to employees, consultants, vendors, and other service providers. It’s a logical solution. But beyond motivation, there are more pragmatic factors at play here too.

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Raising Startup Capital Through Convertible Debt Financing

Business Plan Blog

The first milestone in a new startup’s financing is called ‘Seed Capital’ which refers to the initial investment raised by the founders from their friends and family, or commonly referred to as FFF (Friends, Family and Founders), who mostly use their personal assets. Convertible Debt Financing. Raising Seed Capital.

Finance 93
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How to Fund Your Startup Without Losing Control

Up and Running

For a business that anticipates needing, for example, $500,000 in startup capital, that means that best-case scenario Klemm can expect to give up half of his business’s common stock (and an even larger percentage of control of the business once the deal’s fine print provisions are considered).

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Should You Offer Equity Compensation to Employees?

Up and Running

Typically, employers that offer employees equity compensation will do so in the form of common stock, preferred stock, or stock options. If you’re in Silicon Valley and/or building any kind of tech startup, it’s considered the norm to offer equity as part of a compensation package.”.

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