Let’s say Jane creates a company and owns 100% of it. Jane then decides to give John 25% of the company in exchange for $100,000. Does this $100,000 go into the bank account of the *company* ? Or does it go to Jane, the *individual*, for giving up a portion of her company?
On shows like Shark Tank, the sharks frequently ask the contestants what they plan to do with the shark’s money if they invest, implying that the money will go into the bank account of the *company*. If that is the case, how does Jane, the *individual* who worked hard to create the company, get compensated for the portion of the company she used to own that has been transfered to this new investor?
In: Economics
If jane owns a company and sells 25% then she would pocket the money. If the company was a corporation and was selling stock then John could buy 25% control of the company and that money would go in the company pocket to be used by the corporation.
The Sharks will offer 200k for 20% of the company . That money goes into the owners pocket. In most situations those folks use that money to grow the business to a point where they can make a larger profit. The sharks are choosing people whom they are fairly sure can get the product to market and make them a profit.
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