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Totally earnest question, as I'm a fool: What is the difference between each selling _existing_ shares they own up to the $12.5M valuation and 'diluting' the e
by bm1362 9y ago
Totally earnest question, as I'm a fool:
What is the difference between each selling _existing_ shares they own up to the $12.5M valuation and 'diluting' the existing shares?
- dpark 9y agoNothing so long as a small number of people own all the shares, they all agree to sell an equal portion, and the share price allows an equal portion from all owners. Dilution makes all this simpler.
- URSpider94 9y agoAlso, selling shares would be a taxable transaction for the founders, whereas issuing more shares and selling those is a tax-neutral transaction.
- kgwgk 9y agoIf the shareholders sell their shares the shareholders keep the money. If the company issues and sells new shares the company keeps the money.