Funding a Business

Don’t Let Anybody Work for Free

Here’s an insight for fairness: Always separate payment for work from equity ownership. I posted arguing with partners over compensation earlier this week, dealing with a real problem in a real company. I got a follow-up question to that today, offering more detail and asking for more detail in return. It’s messy. It also looks...


Arguing With Partners Over Compensation

Here’s the question I got today in email: I recently started a business with four others. Modest revenue has begun and two of the partners want to draw compensation. What is the trade off for them drawing compensation while others do not? The question reminds me that a lot of people confuse getting paid for...


A Break for So-Called Smaller Companies

It may soon get slightly easier for smaller companies to sell shares. On Feb. 15 new rules from the SEC go into effect, relaxing controls on sales of so-called restricted securities. A one-year waiting period goes down to six months. This is hardly about startups. It affects companies selling less than $700 million per year....


Before You Tie the Knot

Shelly Banjo has an excellent story in her Running a Business column in The Wall Street Journal, called Before You Tie the Knot. I’ve likened finding an investor to choosing a spouse previously in this blog, but she goes deeper into partnerships and the like. Too many people think they know a friend or colleague...


Real Truth About Selling Your Invention

While I’m on a roll with questions (re: my post here yesterday), here’s another one that comes up a lot. Specifically, it came up this week in Ask Entrepreneur: Question: How can I approach investors for my invention? My patent professional says I should look for capital. I have no idea what it would cost...


True Story: Friends and Family Financing

He was about 45 or maybe 50 when I met him. He was spreading, graying and somber. You don’t know him. You probably never even heard of him. He’d spent the last 15 years of his life starting, building and growing a sailboat manufacturing company. It sounds glamorous, doesn’t it? He sailed as a hobby,...


Becoming an investor/lender through Kiva.org

On this site, and many others, the talk regularly concerns how entrepreneurs can get their startup funding. It is an important part of every business startup. And two parties are always involved. The people who need to get (borrow usually) the money, and those who give (lend, usually) the money. Today I’m encouraging entrepreneurs to...


Are You Facing the Valuation Trap?

Stu Phillips calls it The Valuation Trap and also “the hot button of the week” in his most recent post on Soaring on Ridgelift. I call it surprising, counterintuitive and, therefore, more interesting and more important. For the record, I would have said the opposite of what he does. Here’s what he says: Never answer...


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