Class 12 funding

LIFESTYLE BUSINESS ACCELERATOR 90 Day Program | 10 Funding Your Business © The Startup Garage

FUNDING

DEBT

VS

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EQUITY

PROS + CONS OF DEBT + EQUITY

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Investor gives you money and gets shares/units in your company

HOW EQUITY WORKS

LLC - Member Units Corporation - Stocks Authorized Shares Issued Shares Share price = Company Value/Number of Issued Shares You give an investor authorized but not issued shares in the company Pre Money Valuation - Value of the company before the investment Post Money Valuation - Value of company before the investment plus the investment value

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EQUITY EXAMPLE You start a company as a LLC. You get 100 member units. You take on a partner and give the 20 member units. You decide to take on an investor and change to a C Corp and authorize 10 million shares. You issue yourself 800k and your partner 200k.

You tell the investor the company is worth $450,000 Pre Money Valuation. You ask for a $50,000 investment. The Post Money Value of the company is $500,000. The investor ends up with 10% of the issued shares. ($50,000/ $500,000) You issue the investor 110,000 of the authorized but not issued shares. There are now a total of 1,110,000 shares issued.

Yourself - 800,000 shares Partner - 200,000 shares Investor - 110,000 Š The Startup Garage

Debt + Equity You

STARTUP FUNDING

Friends, Family and Co Founders (FFF)

Debt Only Banks Alternative Financing

Other Financing Options Grants Crowdfunding (Donation & Equity)

Equity Only Angel Investors © The Startup Garage

Venture Capital Funds

Corporate Strategic Investors

PITCHES

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2 Minute Pitch

3 Minute Q&A

3 Minute Feedback from Class

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