Why equity dilution is often a good sign

Hi Welcome back to the Weekly. Hops and Grain brewery is now open for fundraising. Plus we've added a new section with industry specific questions and another with details for a live podcast during which you can ask questions of two Emmy winners who will discuss what it takes to run a Hollywood studio (Monday 5pm PST). Questions answered like: Won't my equity stake eventually be diluted? Also, answers to how much money medical care loses to unnecessary ER calls and the state of our education system for the Deaf population. As always, happy investing! Let us know what you'd like to learn next week. Best, Dylan Director of Operations NEW STARTUPS Gold Medal Brewery Opening blocks from Texas State (33k students) Hops & Grain is a gold medal winning brewery in Austin, TX. After several years they've outgrown their first location. They're raising money to open a new brewery (20,000 barrel capacity) and tap house steps from Texas State University and 33,000 beer thirsty students. 2015 revenue of 1st tap house: $1.9M LIVE FOUNDER INTERVIEW Join Us: Live Podcast with Emmy Winners and Legion M Founders Listen and participate in a live interview with the Legion M founders directly on their profile this Monday at 5pm PST. Follow LegionM (button in upper right hand corner of the Legion M profile) to participate. Follow the profile now. Then listen live Monday at 5pm PST "In investing, what is comfortable is rarely profitable." - Robert Arnott, American Author QUESTION AND ANSWER W/ FOUNDERS Question: Does the world's Deaf population have access to quality education? Only 2% of the world’s Deaf population have equal access to the education their hearing peers receive. This leads to tragic results. In the U.S. alone 29% of Deaf students drop out of school (opposed to 7% for other students). Veditz: 20 investors / Top 10 EdTech Innovation Question: What are the inefficiences in the medical alert market? Emergency routing from systems like Life Alert cost hospitals and insurers $1,500 per call. The medical industry spends $30 billion per year on unnecessary ER calls for the elderly because the automatic response to a call for help has always been an ambulance. 70% of those ER visits are better handled by a $150 nurse home visit. QMedic: 32 investors / 70% margins "The amount of your investment is immaterial; the conviction of it is everything." - Ed Damiano, Founder of Beta Bionics UPDATES AND MOST MONEY RAISED TAXA's Fragrant Moss is Ready for the Public Taxa has successfully removed the herbicide resistance gene from their Fragrant Moss product, and is working on manufacturing enough to distribute to their customers. 398 investors including the Founder of Google Shopping Express Slingfin Named One of "Best Tents" of 2016 Outside Magazine says: "The Verdict: One tent to rule them all—and conquer all four seasons." 94 investors / Founders built Mountain Hardwear Back to the Future Actor Joins The Speakeasy Speakeasy has added Jeffrey Weisman to the cast. The team is gearing up to practice the rehearsal script, which comes up to a whopping 1,145 pages and more than 14 hours worth of material that’s sure to keep customers engaged and entertained. 25 investors / Sold out for 24 weeks straight "...until now the regulations prohibited us from selling shares to the very people that buy our whiskey." - Tom Lix, Founder of Cleveland Whiskey QUESTION AND ANSWER Question: David (Daytona, FL) asked: Won't my equity stake eventually be diluted? Answer: Yes. Your equity stake will almost certainly be diluted. Successful startups continuously need more capital to grow faster so they raise multiple series of financing, until they're acquired or file an IPO. Along the way, shareholders are diluted over and over again before they're able to cash out. At any given time 100% of a company's stock is split amongst investors, founders, and employees. To make room for new investors startups must 'create' or issue more stock. With each financing round the pie grows and your little slice becomes a smaller and smaller fraction of the whole. But that's ok. Fortunately dilution is often a good sign of growth and increased value of your investment. As long as the value of the company increases with each funding round, this is healthy and normal. For example, the first investor in Facebook, Peter Thiel, originally purchased ~10% of the company for $500,000. By 2011, that stake was diluted down to under 3%, but estimated to be worth ~$2 billion. Startups typically raise money when things are going well - to expedite growth. As long as the value of the company outpaces the dilution of your shares you have reason to celebrate. "The road to success is dotted with many tempting parking spaces." - Will Rogers, American Actor and Cowboy OUR FAVORITE ARTICLES FROM THE WEEK How To Convince Investors (Paul Graham) Competition Is for Losers (Peter Thiel) Google's Software to Create the Ultimate Pitch Deck Wefunder will soon let everyone invest as little as $100 in startups

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