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Direct investment market
Most of the stock market is just shifting shares between buyers and sellers and doesn't invest money in the actual companies | |
Have a flexible market cap and a dynamic number of shares
issuable.
So you can invest directly in a company and give the
company
money.
When a company does an IPO is issues a set amount of shares
for sale and raises the amount of money.
I propose companies are doing IPOs continuously
and selling
shares of themselves all the time.
Typically when you buy a share you're just buying it off the
previous holder of the share. You're not actually investing in
the company significantly.
There is such a thing as a flexi cap fund. But that's just a
fund that invests in companies that doesn't have a fixed
market cap.
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Schemes similar to this exist (I'm thinking of a fund
run by an alumni group that invests in startups
founded by other alumni) but generally the investors
must be "accredited investors" i.e. rich or finance
professionals. |
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A rant I read online somewhere proposed having all
employees do an annual vote if they want to "cash
out" the company they work for i.e. if a majority of
employees vote to dissolve the company and evenly
divide the assets of the company among the
workers, then the company is dissolved, the workers
take the money and run and look for new jobs at
other companies. |
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The nature of stock is that its value is a percentage of the company's value. So any new stock issues must dilute the value of the existing stock. Bonds are a way to directly bet on the future of the company. |
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If I buy a holding in company X on the secondary market then,
it's true, I'm not providing additional capital to company X's
operations. However, it is the existence of the secondary market
which makes it worthwhile for those investors who originally did
fund company X's operations. |
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If the venture capitalists (or bankers, or whoever) were not able
to sell off shares in X, at a profit, to suckers like me and you,
then why would they take the trouble and risk of getting X off the
ground in the first place? And how would they then acquire the
liquid capital to fund a new company, Y? |
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And why would I buy shares in a company if I knew that the
value of my holding would be continuously diluted by new
issuance? It would be like buying bonds from a government
bent on hyperinflation. |
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this does not make any sense nor is it in anyway new. You
can buy shares from a public company at time by sending a
mail to the CFO -- notoriously people used to do that. And
you can buy a substantial piece of any public company if you
have enough money directly from the company, if they are
so inclined. And you are getting "new shares" from the
company if you reinvest dividends, and employee stock
options become stock all the time... and... infinitely |
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