Hacker Newsnew | past | comments | ask | show | jobs | submitlogin

Why would they need to raise only 53M if they were profitable? They supposedly take in 100M a year. Are they spending a lot more than that???


Okay, there is a simple answer to this.

Companies have various sources of financing, some considered better than others.

They can take a bank loan ...

They can buy on credit ... buy something, pay for it several months later is a canonical form of financing

They can sell bonds ...

They can offer shares ...

There is normally competition between these forms of finance, and i heard banks usually try to offer the most competitive finance offer, so believe it or not banks loans are usually the best ...

linkdln will probably have to work harder for those 53M than if they were a loan

Finally, financing one firm from its own revenues, I believe is called auto-finance , or something like that, ... and beside the fact that they probably will and do take a portion of their revenues for self-finance ... they probably need more money to expand, and have seek other ways.

I am not sure thought how auto-finance compare to other forms of financing, but i think its one of the best and least expensive .... i need to look more to it, you can learn more about this stuff from the books about finance etc ...

:)


I was thinking the same thing. I believe some people might have wanted to cash out there positions and it took outside money to do it.


it's free money... why not?


But it's not... it's equity.


unless they value the equity they're giving up less than the cash . . .


There is a recession right now, sometimes it is a good idea to just raise money when you can, especially when the dilution doesn't really effect anything.




Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact

Search: