How to become a Dragon?

"davidof" wrote

The Dragons want to invest in the *company*, not buy some shares off you for a heap of money. They want the money to be used for things in the company's business, not for you to buy a Ferrari!

So they need to be alloted newly issued shares.

If you had bought 100 shares for 1 each and then sell 10 of them to the Dragons for 1,000 each, then the company still only has 100. It's you who've got the 10,000, not the company!

In message , Poldie writes

I think we can take it as read that she will have had her fill out of Red Letter Days, and that she is not on the breadline. In addition, unless they are desperate and/or gullible, the BBC must have been convinced by her.

Almost certainly!

In message , davidof writes

Correct!!!

I will never forget the one thing that I learned during my MBA which helped me to survive the last recession. (I didnt only learn one thing, but this particular thing, which I put into practice, mad the difference)

Fundamentally, it taught me to segment the marketplace to the nth degree, thus identifying profitable niches, even at the worst times for the housing market. I saw several small competitors fold whilst I survived to prosper.

I havent seen this expressed in quite such a way during any of the programmes you mention, (and which did not exist in the early '90's).

There is no substitute for running you own company, but I firmly believe that the MBA helped me to run it better.

Tim

Assuming the investment vehicle is a Ltd Co not all of a company's authorized share capital needs to be issued which is one route for new investment and would make sense for anyone planning on getting new shareholders.

But lets assume that our entrepreneurs have 100 shares issued and person A wants 10% of the company. You could do this by creating a further 100 shares, allocating 80 to existing directors and 20 to the new investor. Now let's say the investor pays 100,000 for those 20 shares. This means that the investor is paying 5,000 for each share. This means "he" values the remaining 180 shares at 180 * 5000 = 900,000 puting a value of 1 million on the company. Of course this is all notional because the shares are only worth what anyone will pay for them at any given moment in time.

Sorry Tim but your posts make no sense whatsoever so I think I will pass on investing any more time in you.

"davidof" wrote

All true.

"davidof" wrote

OK...

"davidof" wrote

All OK so far...

"davidof" wrote

Only *after* the 100K injection (I'm assuming that only a nominal sum is paid for the other 80 shares) - in other words, it values "the pre-existing company plus 100K" at 1M.

When the Dragons are talking to the "entrepreneurs", the company doesn't yet have the extra 100K. So the company (as it exists while the negotiations are continuing) is only being valued at 1M - 100K = 900K.

"davidof" wrote

Well the Dragons themselves seem to agree with me!

"davidof" wrote

I haven't asked you for any investment (and I certainly wouldn't give you any % in my company for any amount of "your time").