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An investor has nothing to do with equity stake. An
investor is someone who provides money with an expectation to get a return on
that money. The difference between and investor and a loan, is that a loan
is guaranteed to be paid back at a guaranteed ROI or interest rate, and
guaranteed pay schedule.
An investor really only cares about getting the
maximum return on investment, and is more flexible on the terms, if it means
that they may get a higher ROI down the road because of the terms that were
extended. An investor is expected to make more because their is more
risk. Butan investor does not need to be an equity stake
holder.
Now on the books, payments received into the
company have to be recorded as one of several methods. The two most common
are listed on the books as a loan, or as a cash deposit in the company back
account, which could be defined as equity. The corporate docs would
discuss the terms of that investment or cash injection. Its really
just a tax and liability issue. You can make the terms of a loan
or investment just about anything that you want it to be.
Tom DeReggi
RapidDSL & Wireless, Inc
IntAirNet- Fixed Wireless Broadband
----- Original Message -----
Sent: Tuesday, August 23, 2005 3:04
PM
Subject: RE: [WISPA] Taking on an
investor?
that
would be a loan
what
type of collateral do they have? or what happens if you miss a
payment?
have
you personally guaranteed the money?
-Charles
-------------------------------------------
WISPNOG Park
City, UT
http://www.wispnog.com
August 15-17,
2005
Well, I guess we would call them loans as I
have all control. Correct me if I am wrong. They gave me money
at a fixed rate. Loans or investments?
Charles Wu wrote:
well...in determing their "dumbness" (assuming you're willing to
divulge this information) - what sort of investment / equity share /
control do your investors have?
I mean...assuming it's you and the other 4, does everyone have an
equal share? (which is a different story all together) or does 1 single
person have a majority share and the other 4 are minority
partners
-Charles
-------------------------------------------
WISPNOG
Park City, UT
http://www.wispnog.com
August 15-17,
2005
Well, I guess I found
four "dumb" people that got me started. All my start up funds came
from 4 people. All four were subs from a previous WISP I
owned, (before my partner took everything over and left me out in
the cold) they all said, "I want you providing service, not the
"other guy". So here I am. 7 months in and going
strong. Oh, almost forgot, like my lawyer has me say......all that
is just my opinion. ;-)
I think "dumb" investors are great!
Charles
Wu wrote:
sure
a passive minority equity position stake in a privately held
company is worthless, as legally, the person with the majority stake
can make 100% of the decisions (in terms of purchasing, spending, cash
distribution, etc)
think about it, if it was your money, would you be willing to
just "invest it" into a company when the majority partner can do
whatever he/she wants to and you have no recourse?
-Charles
-------------------------------------------
WISPNOG
Park City, UT
http://www.wispnog.com
August
15-17, 2005
Charles,
would you expand on
that?
On 8/22/05, Charles Wu <[EMAIL PROTECTED]> wrote:
FWIW...no
invester (other than friends and family) worth their salt will
be
willing to invest capital into the company for a minority
position, as that
is basically a sure way to guarantee the loss
of their money
That said, there is a fool born every
day
-Charles
--
Dylan
Oliver
Primaverity, LLC
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