As an entrepreneur and business owner you will probably have to raise capital one or more times throughout your company’s lifecycle. You will meet with your share of private investors and bankers over the years, and in some cases it will make sense to accept funding from these groups. And for many, these will be the only sources of capital that will be required for their company to achieve great success.
Raising Capital From Employees Has Its Positives and NegativesPosted by bea.alonzo under Raising Capital
From http://thefederalcircle.com 4520 days ago
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Offering investment opportunities to employees is probably also a great way to get "buy-in" on their part, however, some start up gurus urge caution about the way this is done. For example, while offering the opportunity to invest (in the form of actual money not sweat equity) might be a win-win, exchanging a salary for interest in the company in order to save money may not. Once the equity in the second example is granted, how can anyone measure the value of the contribution being exchanged for shares going forward and what happens if this employee's contributions wane or become overall less important to the success equation of the company in the future? How is their ongoing contribution to the company to be calculated? Monetary investment, on the other hand, is something apart from performance at work, and can be valued separately as a contribution.
4519 days ago