The Difference between Debt Financing and Equity Financing: Which Is Right For You?

YoungUpstarts

When you’re looking for extra funds, there are typically two options: debt financing and equity financing. Debt Financing. Debt financing involves borrowing money from a lender outside of your business. Equity Financing.

Financing Your Startup

YoungUpstarts

Determining how to finance your business is an important decision with big consequences. There are several ways to approach funding, but there are two main sources of financing: debt and equity. Debt Financing. There are a few cons to debt financing.

Finance Fridays: Getting Started – Allocating Equity and Founder’s Investment

Feld Thoughts

Finance Friday’s gets off the ground with today’s post by introducing you to an imaginary startup, the entrepreneurs that we’ll being following throughout the series, and their first challenges: splitting up the founders’ equity and addressing the case where one of the founders provides the initial seed capital for the business. Jane and Dick each brings a similar level of skill and capability to the business, making it easy for them to agree to a 50/50 equity split.

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7 Equity Crowdfunding Risks Feared By Many Investors

Startup Professionals Musings

According to Yahoo Finance , less than a third of crowdfunding campaigns currently reach their goals, and the rest have to return anything they do collect. In fact, there are many types of crowdfunding, including donations, reward, pre-orders, loans, and equity.

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Raising Money Using Convertible Equity

YFS Magazine

Lately, more founders are inquiring about convertible equity. Finance Grow convertible equity investment pitch money raising startup capital seed funding seep capital

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Do venture capital firms or private equity funds offer debt financing for startups?

Gust

The direct answer to your question is NO, VC and PE funds do not provide debt financing for any companies. For venture capital, this is typically ten times the invested capital, and those returns can only be achieved through equity appreciation, not debt service. Invested Interests debt financing private equity funds startup VCs venture capital firms Their entire business model is based on investing in companies that can potentially offer very high returns.

A VC Puts On His Equity Crowdfunding Hat

YoungUpstarts

It’s been about three months since equity crowdfunding was opened up to all Americans. This change means that virtually any individual, not just the wealthy, will have opportunities to make equity investments in early stage companies. By Tom Walker, CEO Rev1 Ventures.

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Equity financing: great for rapid growth startups

Berkonomics

We’ve spoken of financing a young company through friends and family, known as “inside angels.” There are three classes of equity investors for early stage businesses that we have not yet considered.

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Debt Or Equity To Fund Your Start-up: Which Is Better?

YoungUpstarts

Loan financing and equity investment are two common methods of funding a new business start-up, assuming you do not have the capital on your own. However, if you would rather share the risk, mitigate debt obligations and bring in top-level experts, invite equity investors.

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When should a convertible note be treated as a replacement for an equity round, and take on characteristics of an equity financing?

Gust

A convertible note and an equity round are two different things, done for different reasons. A large majority of serious investors will insist on an equity round, either lightly documented (such as a Series Seed) or fully documented (such as an NVCA Model Series A). If they are similar in range, go right for an equity round, instead of incurring the cost and hassle of double-papering a note and a preferred round. It doesn’t work that way.

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Alternative Financing Options For Startups

YoungUpstarts

Here are several alternative financing options for startups aside from running up your credit cards. The downside is that you’re typically giving up equity, you’re always giving up some decision making authority, and you may pay a portion of your profits forever for this assistance.

4 Creative Ways To Finance Your Growing Business

YoungUpstarts

Full disclosure – any kind of financing comes with costs, whether it’s interest payments, equity, and/or your very valuable time which, as an entrepreneur, is the thing you will always wish you had more of. Purchase order financing.

Are You Ready for Equity Based Crowdfunding?

Up and Running

Then, the unveiling of the Securities and Exchange Commission’s proposed equity crowdfunding rules reveals a panacea for growing your business’s coffers. Equity crowdfunding vs. donation crowdfunding. Equity crowdfunding differs from donation crowdfunding in two major ways.

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New Early Stage Financing Options for Entrepreneurs

Startup Professionals Musings

In the last year, there has been a resurgence of interest, some say a bubble, by both angels and VCs, in a pre-Series A kicker to identify promising startups with seed funding, before major equity has been given away. entrepreneurs startup financing early-stage funding business

10 Partner Qualities to Test Before Sharing Equity

Startup Professionals Musings

Look at the big picture first of development, finance, and marketing/sales. entrepreneur startup co-founder partner equity businessA while back I talked about how and where to find a co-founder in “ For a Startup, Two Heads are Always Better Than One.”

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A Conversation on the State of Equity Financing

The Entrepreneurial Mind

Breaking Business : The State of Equity Financing. Tweet Facebook LinkedIn Tumblr Stumble Digg Delicious The post A Conversation on the State of Equity Financing appeared first on Dr Jeff Cornwall

Saying ‘No Thank You’ To Equity Financing

The Entrepreneurial Mind

The post Saying ‘No Thank You’ To Equity Financing appeared first on Dr Jeff Cornwall Although we have had interest in investment in our startup, we have chosen to forgo any outside funding.

Should You Offer Equity Compensation to Employees?

Up and Running

Of course, not every equity compensation story is a David Choe Story. If you’re thinking about extending equity to an employee or a vendor (as in the example above), you should know that the topic is multi-faceted. In this article, I’m going to examine: What equity compensation is.

Don’t Expect An Equity Investor For Your Non-Profit

Startup Professionals Musings

Obviously, these companies still need money to get started, or finance growth, just like a for-profit company. What options do they have available to them, since they can’t sell a share of the company (no equity investment)? There is no discussion of equity, or return on investment.

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Founder's Dilemmas: Equity Splits

Startup Lessons Learned

Having seen these dilemmas derail countless startups, I wish every entrepreneur and prospective founder would read this book." - Eric The following is an exclusive excerpt which sets up a common pitfall regarding equity splits.

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7 Seed-Stage Funding Sources To Finance Your Startup

Startup Professionals Musings

I challenge any entrepreneur, for example, to define the difference between "seed-stage" and "early-stage" financing. These funders often offer convertible notes, rather than the traditional priced equity.

Equity Crowdfunding: Your Solution for Small Business Financing?

Duct Tape Marketing

Equity Crowdfunding: Your Solution for Small Business Financing? But in order to travel, add personnel, and execute on expansion plans in the coming year, many small businesses will need financing… which is where things get tricky.

10 More Creative Ways to Finance Your Startup

Startup Professionals Musings

Thus “creative” really means maximizing non-bank financing. While sizing up the alternatives, I couldn’t help but pick up a new book by Karlene Sinclair-Robinson with the creative title of “ Spank the Bank: The Guide to Alternative Business Financing.” Vendor financing.

Financing Acquisitions: Keys to Structuring the Deal And Obtaining The Funding

YoungUpstarts

Think of financing an acquisition as an exercise with two parts that work in concert: 1) structuring a desired deal with a suitable target and 2) obtaining the funding. Think about the whole capital structure and the impact to the various layers of financing. by Kenneth H.

Series AA Equity Financing Documents

ycombinator.com

Series AA Equity Financing Documents Y Combinator and Wilson Sonsini Goodrich & Rosati are happy toannounce the Series AA Equity Financing Documents.

[ADV] 6 Solar Financing Ideas That’ll Help You Get Off The Grid

YoungUpstarts

Solar panel financing can help you get the energy you want for your home, reducing your monthly power bills. We’ve put together our top solar financing methods here – read on to learn more! Home Equity Loan. This equity serves as collateral for the loan.

The Proliferation of Standardized Seed Financing Documents

Feld Thoughts

As of today’s announcement that Ted Wang at Fenwick & West has collaborated with a group of bay area early stage VC’s and angel investors to create the Series Seed Documents (the site isn’t up yet so I can’t opine on the quality of the docs but I expect them to be fine) we now have – at my count – four different standardized seed financing documents floating around the industry. Y Combinator Series AA Equity Financing Documents (by WSGR).

An Advisor Equity and Advisor Pool Breakdown

Eric Friedman

Bigger/better advisors who get more equity have things like; excellent domain expertise to help you avoid pitfalls, deep connections within the industry to help with the intros, partnerships, and more. As a potential advisor looking to get involved with the company; MORE EQUITY!

Convertible Debt, Priced Equity Rounds and Deal Timing

Gust

An impromptu Twitter debate arose among Fred Wilson, Dave McClure, Mark Suster, Chris Dixon and others about convertible debt, priced equity rounds, and the nuances of early stage financing. Invested Interests angel investment convertible debt convertible note deal terms due diligence financials fundraising priced equity priced rounds tactics valuation valuations VCs venture capital

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Equity for Early Employees in Early Stage Startups

SoCal CTO

I was asked by a reader how much equity he should give out to early employees and to service providers in a very early stage startup. Founders are likely not paid for a long time and have a sizeable equity percentage for early risk and having the concept.

When to trade equity for services

The Next Web

Giving up equity in your business, as an alternative to paying cash, often sounds like a great idea to cash-starved startups. But, giving up equity in your business is often a very big decision, and can come at a long-term price, both financially and operationally.

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Startup Equity Crowdfunding Grows in Europe (NESTA Report)

VC Cafe

Amongst the different types of crowdfunding: Donation, Reward, Lending and Equity, the latter is on the rise as a fundraising mechanism for European startups. investors can then, through the platform, buy small parts of this equity stake. Decision on how much equity.

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Is Convertible Debt Preferable to Equity?

Both Sides of the Table

Convertible debt is an investment that “converts&# into equity in the future usually at a discount to your next funding round price and sometimes has a “cap&# (maximum price). a priced/valued preferred stock financing)?&#.

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How to think about cash vs. equity compensation

A Smart Bear: Startups and Marketing for Geeks

It’s among the most-asked questions on startup forums, and an issue we’re dealing with right now at WPEngine as we bring on new employees: How do you decide how much equity (shares) to give a new employee or partner? How-To finance hiring investment

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New Early Stage Financing Options for Entrepreneurs

Gust

In the last year, there has been a resurgence of interest, some say a bubble, by both angels and VCs, in a pre-Series A kicker to identify promising startups with seed funding, before major equity has been given away.

Decline in Private Equity Deals in Israel for Q1 2011

VC Cafe

IVC Research Center has released the Quarterly Survey of Israeli Private Equity Deals for Q1 2011. Eleven private equity deals in Q1 2011, amounted at $216 million, a 68% decrease from the $668 million in Q1 last year, and a 74% decline from the previous quarter ($826 million).

Making Sense of the Stock Market Drops in Relation to Venture Financing

Both Sides of the Table

It will make follow-on financings much harder and people will have to consider whether or not to do inside rounds. Our investors often allocate across different classes (real estate, commodities, public stocks, bonds and private equity – of which VC is a subset).

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Revisiting Paul Graham’s “High Resolution” Financing

Both Sides of the Table

When I first read Paul Graham’s blog post on “High Resolution&# Financing I read it as a treatise arguing that convertible notes are better than equity. He’s fine with equity provided it’s cheap to paper it legally.

How Finance Can Usher In Digital Transformation With One Key Resource

YoungUpstarts

If the entire business isn’t caught up on digital transformation, it makes it difficult (impossible, even) for finance leaders to engage in strategic leadership and optimize revenue opportunities by driving ROI from tech investments.

How to Scale a Venture Capital (or Private Equity) Fund

David Teten

Sophisticated VC and private equity funds have a wide array of options for leveraging outside operating executives. Another example is Correlation Ventures ($300M+ AUM), a VC firm which co-invests in financings with at least one other new outside VC.

SEC Releases Rules for Equity-based Crowdfunding

SiliconHills

Early next year, startups may be able to raise money from the general public to finance their ventures. The Securities and Exchange Commission on Wednesday released its long-awaited proposed rules governing the practice of equity-based crowdfunding that allows startups to sell securities directly to the public. Legislation from the JOBS Act, signed into law by […] The post SEC Releases Rules for Equity-based Crowdfunding appeared first on SiliconHills.

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9 Creative Ways to Finance a New Product-Based Business

Up and Running

We asked nine company founders the following question: What is one creative way to quickly finance a new product-based business OTHER than crowdfunding? Have Your First 10 Customers Finance Development. The added benefit is that you get to keep all the equity in your company.

An Entrepreneur’s Guide to Funding the Business

The Startup Magazine

Without the proper knowledge of how to get funded and which type of financing is right for you, you won’t know where to go or who to ask. An alternative lender can get you financed very quickly, but you still have to meet a small set of requirements.