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I used those examples because they’re easy to understand. But how do you think angel investors like YC make money? An angel investment is also using leverage, b
by mise_en_place 4y ago
I used those examples because they’re easy to understand. But how do you think angel investors like YC make money? An angel investment is also using leverage, banking on either future earnings or fundraising rounds to magnify your initial investment with a convertible note.
- nradov 4y agoThat's not how it works. Angel investors and VC firms almost always purchase equity. It's not really possible to purchase pre-IPO stock on margin (although some wealthy investors can take out loans collateralized by their other assets, and then use that cash to invest in other opportunities).
- mise_en_place 4y agoReally? I thought it’s better to defer valuation as late as possible, due to the regulatory burden and cost.
- nradov 4y agoThere's no regulatory burden. Pre-IPO equity funding rounds always involve some kind of valuation process and negotiation. The investor is purchasing a certain percentage of the company for a certain number of dollars.