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I guess the risk is going from possible 50%+ ownership of a a company worth a few millions or tens of millions to much less ownership of a company worth roughly

I guess the risk is going from possible 50%+ ownership of a a company worth a few millions or tens of millions to much less ownership of a company worth roughly the same amount if it fails to grow. Or the risk of being forced out of control, I guess. I think that's a good illustration of why people do it. 10% of a $20 million dollar company is still worth something and even if you lost ten or twenty million or so from theoretically doing nothing, having 10% of a multi-billion dollar company is worth a whole lot, so people like that gamble.

dragontamer 5y ago
> I guess the risk is going from possible 50%+ ownership of a a company worth a few millions or tens of millions to much less ownership of a company worth roughly the same amount if it fails to grow. Or the risk of being forced out of control, I guess. If the company is worth $50 million, and you sell 10% of it, the company gets $5 million bucks. Since the company is now $5-million richer, you'd expect the company to really be worth $55 million at least (since its the same company, except now with $5 million more bucks). It is now on the onus of the CEO to ensure that the extra cash does indeed grow the company's value. Sure, the money could be pissed away in a party yacht. But ideally, a good CEO will do something reasonable with the money. (Though the party yacht is often then used to raise more money from other rich folk, raising the value of the company again, lol) As long as the CEO doesn't fall into the trap of just grabbing money without purpose... as long as the CEO has a plan for what to do with the investment money... its probably a good thing. IMO, where a lot of CEOs make a mistake is that they go into full-tilt money raising mode and never stop to think if they have "enough money for now". But I doubt that OnlyFans is at this stage of the game, OnlyFans probably can grow much faster with a bit more investment money.
- kbenson 5y ago
  Yeah, I just meant to show what is probably a worst case (not really, worst case would be company goes under or loses a lot of value/market share I guess), where they accept money and it's spent in an effort to help the business but just doesn't. I guess in the example you put forth that would be a $50 million company that takes $5 million, spends it on a major advertising campaign, and sees zero difference. Now they've given away equity and gotten nothing in return other than that what they tried before doesn't work. The flip side is that it helps immensely and your lower equity might be worth more overall. Any anything in between. At least that's how I understand it. I'm not trying to pretend I know a huge amount about this. It's mostly general knowledge accumulated from normal sources and discussions here, so if you think I'm totally missing something, I'm happy to hear it.

dragontamer 5y ago

> I guess the risk is going from possible 50%+ ownership of a a company worth a few millions or tens of millions to much less ownership of a company worth roughly the same amount if it fails to grow. Or the risk of being forced out of control, I guess. If the company is worth $50 million, and you sell 10% of it, the company gets $5 million bucks. Since the company is now $5-million richer, you'd expect the company to really be worth $55 million at least (since its the same company, except now with $5 million more bucks). It is now on the onus of the CEO to ensure that the extra cash does indeed grow the company's value. Sure, the money could be pissed away in a party yacht. But ideally, a good CEO will do something reasonable with the money. (Though the party yacht is often then used to raise more money from other rich folk, raising the value of the company again, lol) As long as the CEO doesn't fall into the trap of just grabbing money without purpose... as long as the CEO has a plan for what to do with the investment money... its probably a good thing. IMO, where a lot of CEOs make a mistake is that they go into full-tilt money raising mode and never stop to think if they have "enough money for now". But I doubt that OnlyFans is at this stage of the game, OnlyFans probably can grow much faster with a bit more investment money.

kbenson 5y ago
Yeah, I just meant to show what is probably a worst case (not really, worst case would be company goes under or loses a lot of value/market share I guess), where they accept money and it's spent in an effort to help the business but just doesn't. I guess in the example you put forth that would be a $50 million company that takes $5 million, spends it on a major advertising campaign, and sees zero difference. Now they've given away equity and gotten nothing in return other than that what they tried before doesn't work. The flip side is that it helps immensely and your lower equity might be worth more overall. Any anything in between. At least that's how I understand it. I'm not trying to pretend I know a huge amount about this. It's mostly general knowledge accumulated from normal sources and discussions here, so if you think I'm totally missing something, I'm happy to hear it.