STARTUP SECURITIES is an easy to read primer that aims to
acquaint entrepreneurs and small business owners with the world of
startup funding. In its four sections you will find information
about the tools entrepreneurs have at their disposal to raise
capital and to motivate and reward investors or employees.
In the first section, FINANCING AND INVESTING, we explore the
fundamentals of the relationship between new businesses and
investors. We go over the three basic types of securities startups
use to raise funds – Bonds (or generally loans and debt),
Shares and Options.
We cover these specificities and explain briefly what value they
bring to the holder and the issuer of the security. This is
followed by a comparison of finance in private versus public
In the second section, STARTUP FUNDING, we go over the drawbacks
and benefits of financing your company with debt or equity.
We also cover a middle ground option presented by financial
instruments called convertible notes.
The third section is dedicated to the topic of using SECURITIES
AS COMPENSATION. We discuss the motivations behind this practice as
well as its appropriateness in different situations.
In the final section, ROADMAP, we touch upon the practical
issues of determining your funding needs, creating a fundraising
strategy, choosing between passive and active investors and
possibly motivating them with securities based compensation.
After reading this eBook, you will have a solid grasp of the
basics of funding your company.
Most importantly, you will have an understanding of the types of
financial tools used for startup funding and the shortfalls and
benefits of using each one in different situations.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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On 12th November 2016, new laws will commence to protect small businesses from unfair terms in standard form contracts.
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