what is the risk involved in other financing situations such as sellingbonds,issuingstock,venturecapital,debt?
Posted by admin on 27 Feb 2010 11:01 pm. Filed under Small Business.
brandy166904
this is about running a business and I need to know the risk involved in other financing situations such as sellingbonds, issuing stock, venture capital, debt, and equity financing.
this is about running a business and I need to know the risk involved in other financing situations such as sellingbonds, issuing stock, venture capital, debt, and equity financing.
2 Comments to “what is the risk involved in other financing situations such as sellingbonds,issuingstock,venturecapital,debt?”
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On March 2nd, 2010 at 10:02 am
I’ll go one by one.
The risk in selling bonds is if you default on the bonds you will have to file for bankruptcy liquidate your assets in order to pay your creditors before you are able to recoup anything for your business. Creditors have first ***** at liquidated assets.
The risk in issuing stock is the diminished ownership in your venture and the requirement to please shareholders and depending on your company this may get tedious.
Venture capitalists often demand exorbitant returns on their money, often 200-300% over a short term period (3 years). So you can see all your profits go directly to a venture capitalist.
Debt financing is a different way to say selling bonds and equity financing is a different way to say issuing stock.
One other option is to find an angel investor, someone willing to offer in most cases a smaller contribution than a venture capitalist but often an unfettered contribution. Look for philanthropist types who are interested in seeing small businesses succeed, or family members.
Hope this helps.
On March 2nd, 2010 at 11:26 pm
alot of risk in any financing situation.