Watch Who Owns What? Online

Date Added: Thu, 05 Nov 2009 Run Time: 1m 17sCategory: Business
Description:

At the beginning when you have angels and founders, the founders own most of the company, and the angels will put a little bit of money in. Let’s say founders have 80% of the company, and the angels will have 20%. When you get venture capital money into a company, we will own a large majority; anywhere from 20% to 60%. The money that we put in is really where we get our ownership. It's the risk capital equation. Going back to my comment about reasonable financing, if you look at the incremental build, if you're putting just enough money in at the right time, and your valuation goes up, you're not going to get diluted as much on ownership. So for the founders, they want to maintain their ownership. The only way they're going to do that is to increase the valuation of the company. So we're all motivated to do the same thing.