Category Archives: Founders Stock

The example illustrates some of the key points to think about with regard to financing a start-up company, building value, and allocating stock ownership. Points of particular note are: When you make stock allocations, balance the dilution and the corresponding … Continue reading →

Becoming a publicly traded company brings significant changes, not the least of which is that in the future the results and operations of the company will be exposed to public scrutiny. The process of raising public money is also vastly … Continue reading →

The company completes development, launches the product, and receives very good market acceptance. However, the cost of rapid growth starves cash flow—a common problem with emerging companies—and the company goes back to the private placement market for a mezzanine round … Continue reading →

 Second Round Funding Product development continues, but as so often happens, challenges arise and the company misses deadlines. This delays the product roll-out, which in turn delays initial revenues. Now the company faces a cash flow problem as well … Continue reading →

The First Round The technically biased founders are keen to start product development, but their adviser counsels that the seed money will quickly be consumed and stresses the need to always try to anticipate future financial requirements. Two of the … Continue reading →

A Fictional Study: Stock Ownership, Value and Dilution The Seed Round Imagine that five people start a company that intends to provide a knowledge management tool to help criminal justice agencies solve crimes. The unique selling proposition will be the … Continue reading →

A Primer on the Relationship of Company Value and Owners’ Stock Value Maximizing Founders Returns Why would you want to sell part of your company? After all it’s more complicated to run a jointly owned company; you might lose control … Continue reading →