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Great points... as to #3, investors are often happy to be buyers. They are buying shares anyways that would otherwise have to be created. Allowing founders and
by cashsterling 2y ago
Great points... as to #3, investors are often happy to be buyers. They are buying shares anyways that would otherwise have to be created. Allowing founders and employees to sell shares lowers dilution vs. creation of new shares... usually this is not a large effect, but still not bad for current & future investors.
- yuliyp 2y agoI mean it effectively means that the amount of cash going into the business is less than it otherwise would have been. The company wanted $5M of cash. With the owner selling $500k worth of shares it means they had to find $5.5M to be invested. The only reason it happens is that the founder is negotiating both on behalf of the business and a bit for themselves.
- ishan0304__ 2y agoI mean it basically means that the founder is not some dude in early 20s who can crash on a couch and work off coffee shops, they r going thru life as well and they r the one's who drove success so they rightfully expect a piece of that success