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raising funds != taking a loan And if you've ever raised funds then yes, it's an accomplishment and cause to celebrate. Just get back to work the next day.
by jmathai 14y ago
raising funds != taking a loan
And if you've ever raised funds then yes, it's an accomplishment and cause to celebrate. Just get back to work the next day.
- 001sky 14y agoreference > http://en.wikipedia.org/wiki/Modigliani%E2%80%93Miller_theorem http://en.wikipedia.org/wiki/Modigliani%E2%80%93Miller_theor...
- saraid216 14y agoRaising the value of your firm is not the only reason to celebrate as a company; successfully making it possible to continue operating/expanding for another year is a good thing.
- joonix 14y agoAnd a loan would let you do the same. The comparison is valid. For some reason there's a stigma against debt financing because it has to be "paid back" in installments. Equity financing still has to be paid back, the transaction just has different mechanics. Equity investments don't "raise the value" of the firm. They simply signal that other people with money believe you will generate X amount of dollars in the future. Debt financing involves signals, too: the interest rate reflects what other people with money think about your ability to generate X amount of dollars in the future (to hopefully pay back your loan). GE pays a very low interest rate on its bonds because of its value and perceived ability to pay back debt.
- saraid216 14y agoYou don't seem to be disagreeing with me.
- 001sky 14y agomaking it possible to continue operating/expanding for another year is a good thing This is not true if you are destroying value, so its not true per-se. A Junkie with an Amex black meets this definition of success, for example.