Introduction Quiz

Common Equity is considered permanent capital stock.

Selling 20% of your Company’s Common equity for $1,000,000 to investors familiar with the concept of dilution would be wise.

With the inherent risks of investing in a start-up or early stage company, only a fool invests with any dilution present.

Cumulative are paid in arrears before any Common Class A Shareholders or Members receive dividends.

The stated percentage in which the aggregate of the preferred equity issued is known as the Participation Rate

Call periods typically run more than 5 years.

“Notes and Bonds” Commercial (as opposed to government) Notes and Bonds are typically priced at $5,000 each and one would issue 2 Notes or Bonds at a price of $5,000 for a $10,000 investment.

Notes and Bonds can be convertible into a pre-set amount of common stock or units but only at the maturity date.

From a financial institution’s standpoint, A Start-Up Company is considered a company at the pre-revenue stage.

From a financial institution’s standpoint, an Early Stage Company is considered a company at the post revenue, but pre-profit stage with less than five years of operating history and less than $5 million in annual sales.

Passive Capital means you’re not required to comply with federal or state(s) securities laws, rules or regulations, as this form of capital is exempt.

Active Capital means:

Permanent Capital would include convertible Notes or Bonds.

Franchise sales, pre-construction price for real estate or other asset sales, or the sale of other rights, are not considered raising capital.

Obtaining grant money from governmental or other organizations as a form of available, working capital for a start-up, early stage, or even seasoned companies is considered raising capital.

What are the primary fears investors have while deciding to invest in a start-up or early stage company?