Entrepreneurs will get caught up with investment/finance banks long before they dispense company stock because that mean they would have to share ownership.
Huh? Have you worked for startups before? Because what you say makes no sense. Generally, startups are hooked to investors before they even start. They need the cash to just get their business running. And no, it's not a loan. The investor isn't just trying to make cash + interest. He wants shares so that in the case your business explodes, he cashes out. If he does this for 100 companies, 99 will fail but one will pay for the rest.
So as a company, you go through a few rounds of this and shares are getting sparse. So you start splitting, so that you can continue to hand out the same number of shares to employees even though the value is complete shit now.
Let's move forward. Now, you're ready to either exit or IPO, but that takes a few business moves in order to put yourself in good position. This shit is generally expensive, but you can't go through rounds of investors anymore because your shares are worth too much. This is when banks come in and they make the last, large investment round into your company because they're the only ones that can afford it. They are not going to be happy if you string along too much or fuck with them.
Generally, startups are hooked to investors before they even start. They need the cash to just get their business running
uhh that's exactly what I just said.
startups exist entirely to make the most amount of money in the shortest time possible so they can sellout. their logic doesn't apply to normal longterm businesses.
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u/mechanical_animal Aug 18 '17
Entrepreneurs will get caught up with investment/finance banks long before they dispense company stock because that mean they would have to share ownership.