
Yesterday someone handed me a few thousand bucks. - dottertrotter

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dottertrotter
Yesterday someone handed me a few thousand bucks. It was a potential investor
I had spoken too a couple of months ago, and yesterday out of no where they
cut me a check. It was the weirdest feeling. I felt validated, optimistic,
fearful, all at once. I loved it. For those of you who have received any type
of funding for the first time from an outside source, did you feel the same?

~~~
wastedbrains
What position, equity, loan, or other did you give the investor in return. Are
you going through all the legal red tap to make sure everything is by the book
and how complicated has that process been to start taking is money. One thing
that has kept us from accepting small investments is the legal tape
surrounding additional bookkeeping.

~~~
staunch
I recall hearing about some company that accepted tons of small investments,
which made getting signatures at acquisition time a real pain. Can't remember
what company though.

~~~
pg
<http://news.ycombinator.com/item?id=1097>

~~~
Tichy
Any recommendations for good tutorials on the equity problem? I somehow find
it very hard to get a good understanding of it, and most "found a business"
books seem to avoid the issue, too.

Assuming zero knowledge... For example, what does it mean to own equity? If
you own 10% of the company, I suppose it doesn't mean that you get 10% of it's
earnings. I gues you would get 10% of dividends? But what if the company never
decides to pay dividends? Since you only have 10%, there seems to be nothing
you could do against it? Rather than pay dividends, the CEO holding 51% of the
company could just decide to pay himself a salary of several million $?

Sorry if that sounds very stupid, but where does one ever learn about that
kind of things as a unsuspecting citizen? Any pointers would be greatly
appreciated!

~~~
pg
I think the reason everyone avoids the issue is that it's impossible to give
general advice. The amount of stock you should give to a new hire depends on
how valuable he is, and how valuable the company is. The amount of stock given
to the first hire could range from 1% to 50% or perhaps even more.

Most startups don't pay dividends. Even Microsoft barely does. Owning 10% of a
technology startup basically means you get 10% of the proceeds if the company
gets bought, or hold 10% of the now tradeable shares if it goes public.

Someone holding 51% could pay himself all the company's profits as salary only
if the company hadn't taken substantial investment. Otherwise the investors
would have protection against such abuses as part of the deal terms, and the
employees would thus be protected too.

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zcoelius
Congrats, that is a big step. I can remember the first time we received
investment with nothing but fondness. It like the first time you have sex,
you'll never forget it...

~~~
omouse
It's like the first time you have _good sex_ , you'll never forget it...

There, fixed that for you ;)

