JWI 531 Jack Welch Management Investing in a Startup Business Discussion
You have a great idea about a new business opportunity. Youve run the numbers and are confident that with an initial investment of $500,000, you can turn a profit in three years and generate $150,000 in operating income per year. But you realize there are no guarantees. Further, you anticipate that there is at least a 50/50 chance the economy will enter a recession within the next two years.
- What factors will be most important in determining if you want to fund your venture through equity or take a loan for the $500,000?
- If you meet all your projections, will you be happier in five years that you used equity to fund the venture or debt? Why?
- If the company goes bankrupt in five years, would you have a different answer? Why?