96 lines
2.7 KiB
Org Mode
96 lines
2.7 KiB
Org Mode
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#+title: Section 13 | Lesson 75 - financing alternatives
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#+HTML_HEAD: <link rel="stylesheet" type="text/css" href="../_share/media/css/org-media-sass/categories/business.css" />
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#+OPTIONS: H:6
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* Links
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- [[./../mba-main.org][TOC | Business]]
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- [[https://www.udemy.com/course/an-entire-mba-in-1-courseaward-winning-business-school-prof/learn/lecture/4284470#overview][S14:L75 course video]]
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* notes
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the company is mature
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but it is not growing
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** financing alternatives
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- equity investors are better for startups
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- if you are in debt and miss a payment, it is death
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- if you must take debt, do it as an LLC so they can't come after you
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*** additional sources
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- raising money is tough
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- do not pay upfront fees to consultants to raise money
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- they are fraudulant
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- you pay people AFTER THEY EARN THE CASH
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** commercial & venture bank lending
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- commerical loans are possible with a few years of operating history
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- they want to see cash flow projections based on a few years of history
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*** don't really care about assets
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- unless you are extremely liquid
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** VC vs Debt firms
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- VC love risk
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- Debt firms hate risk
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- interest on debt
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- warrants on stock options
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*** equity
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- primary for venture capital
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- secondary for debt firms
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*** timing
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- beginning venture capital
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- ending debt firm
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** reasons not to do debt financing
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- minimum 2+ years financials
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- few tangible assets
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- low revenue (tech)
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- tech firms always have this problem
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- 1-2 employees are too valuable
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** credit card debt
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- 50% of startups use this
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- if your CR rating sucks you can't raise debt
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** foreign investor funding
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- US gov lets you buy lawful permanent resident status if you invest $1mn in a startup and create or preserve 10+ jobs
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- minimum drops to 500k if in a rural or high unemployment region
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** government loans
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- native americans
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- hawaiians
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- women
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- veterans
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** vendor financing
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- "2/10 net 30"
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*** how it works
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- you buy goods on credit from a vendor
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- if you pay back before 10 days, you get discounted 2%
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- if you pay back between 10-30 days you pay the full amount
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- so always pay before the 10 days, because then you avoid an effective compound rate of over 40%
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*** example
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- you have a buyer lined up for 1000$ worth of goods, assume he pays you upfront
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- vender hands you goods, you pay vender $980 immediately due to 2% discount under 10 days
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- hand over goods to buyer
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- pocket 20$
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** vendor leasing
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- you lease equipment instead of a money loan
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- part of payment is in warrants
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** other financing
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- morgage if company owns the business
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- direct public offerings
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- you can get a loan of up to $1mn through a syndicate of many investors
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** bootstrapping
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- pay for it yourself
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- better to use Other People's Money
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- set up LLC so protect family
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