Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
SEARCH
Welcome
VIDEO MY SMARTMONEY SMALL BUSINESS MAGAZINE SUBSCRIBE
HOME
INVEST
SPEND
BORROW
PLAN
RETIREMENT
TAXES
TOOLS
ANSWERS
Tweet
By SARAH MORGAN
INVESTOR CENTER
MARKETS: DOW NASDAQ S&P 500
WATCHLIST
PORTFOLIO
POP-OUT
RESEARCH STOCKS & FUNDS Enter a Ticker Symbol SEARCH RECEIVE STOCK ALERTS STOCK SCREENER
LIST VIEW
LOADING...
MAGAZINE
Michigan's Ross School of Business.. "There's been a cloud over the whole earlystage market," he says. Small business experts say this trend is just one more sign of how hard the recession has been on entrepreneurs. Not only has it hurt sales, sending many fledgling businesses under, but it has also seriously impeded the ability to raise cash for the next big idea. Banks are reluctant to lend, and it is more difficult for new business owners to access a personal or small business credit card, says Scott Edward Walker, the CEO of the Walker Corporate Law Group, a firm that often advises small businesses. In the past, some businesses also got a form of financing from vendors who would provide machinery or telecom equipment on credit, but those days are gone, too, Walker adds.
BUZZ BOX
ANSWER ENGINE
FIND ANSWERS TO LIFE'S CHALLENGES
$50 million out before anyone else gets a slice of the pie. That employee now only owns 1% of the $10 million left over. If the company is bought for $50 million or less, common stockholders would get nothing at all, experts say. To be sure, that "liquidation preference" should, however, be taken into account at the outset, when the company's board determines the value of the stock options, says David Cappillo, a partner in the technology companies group at Goodwin Procter, a law firm that often advises entrepreneurs. The company's common stock should be given a lower valuation to start with than the preferred stock, to reflect the possibility it'll be worth less later, he says. Sure, if the company is acquired for less than the money it raised from investors, the common stock would be worthless. But if the company ends up with a hugely successful IPO, the common stock would see its value rise a little more because it started out with a lower valuation. (Just ask all those new Facebook millionaires.) Plus investors need to be compensated for the risk they're taking on, says Alex Finkelstein, a general partner at Spark Capital, a venture capital fund. "We're risking our capital, and for that risk we need to make sure we get money out first in a worst-case scenario" where there isn't much of a payout to split up, Finkelstein says.
failed idea, says Jon Karlen, a general partner at Flybridge Capital Partners, an early-stage venture capital firm. For example, one of Karlen's current investments was founded by a Venezuelan who initially hoped to start an English-language tutoring business. But turnover among the tutors was high and the owner realized the business would only grow so much. Now the company, called Open English, is developing an on-demand, online language learning program. "He never would have come up with this if he hadn't already slammed his head against the wall trying to do the offline version," Karlen says.
COMMENTS
LIKE
TWEET
REPRINTS
Capital One Credit Cards See if you pre-qualify in 60 sec. Find a card with features you want! www.CapitalOne.com 5 Growth Stocks for 2012 Free Report: The Top Stocks Your Portfolio Needs. www.insideinvestingdaily.com Free Stock Quotes Looking For Free Stock Quotes? Find It Nearby With Local.com! Local.com 5-Part Buffett Checklist You must use this list before buying any stock www.hiddenvaluesalert.com
WE RECOMMEND
10 Things Electronics Retailers Won't Say (SmartMoney - Spending) Why Some Entrepreneurs Call ADHD a Superpower (SmartMoney) The Real Reasons the Rich Are Moving Cash to the Caymans
(SmartMoney - Invest)
Tw itter
RSS