12 Private equity: Investing in startups
This chapter covers
- How to invest in startups
- A startup’s evolution from pre-seed to Series C
- Differences between venture funds, angel syndicates, and sovereign wealth funds
- How to address valuation, dilution, and scoring
Many programmers contemplate starting a startup at some point. Even if you haven’t considered creating one, you’ve likely had friends who have. Ambitious development teams can produce impressive products with minimal upfront costs, especially when working without salaries, but eventually, finances become a critical topic of discussion.
Working purely for equity, however, isn't always enough to create a product. Some team members require immediate cash flow to meet living expenses, necessitating salaries or invoicing for their contributions. While cloud providers may offer attractive starter packages, they typically don't provide unlimited free resources. Additionally, acquiring and servicing clients incurs extra costs.