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If one of the founders is reading - why not taking the money in the bank as dividend right before the fund raising (with full disclosure to the future investors
by sashagim 12y ago
If one of the founders is reading - why not taking the money in the bank as dividend right before the fund raising (with full disclosure to the future investors, of course). You get a similar amount of money (although sharing it with the early investors), but all the money you're raising goes to the company, which I assume is a simpler model. Wouldn't that be simpler?
Best of luck with completing the round, and with future growth!
- leowidrich 12y agoYup, great questions! We considered a number of things: dividends, loans, buying back shares without raising money, debt. Dividends for a c-corp are taxed super high (big fan of paying taxes, but you end up paying something like 60-70% tax, not a good idea!). So raising extra cash with minimal dilution (2.5% for this round) was most efficient. Right now, all money raised goes to company, then company buys back shares from early team members - investors still get preferred stock. We're not selling our common stock directly to investors - you're right, that'd be too complicated and not in investors interest. Would love to answer more questions on this, keen to explain our full thinking!
- sashagim 12y agoInteresting, thanks!