12 Private equity: Investing in start-ups
This chapter covers
- Investing in start-ups
- Seeing a start-up’s evolution from pre-seed to Series C
- Comparing venture funds, angel syndicates, and sovereign wealth funds
- Addressing valuation, dilution, and scoring
Many programmers contemplate starting a start-up 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 up-front 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, so salaries or invoicing for their contributions is necessary. While cloud providers may offer attractive starter packages, they typically don’t provide unlimited free resources. Additionally, acquiring and servicing clients incurs extra costs.