As I noted in a previous blog, entrepreneurs pay a high cost for capital. As an entrepreneur, your cost of capital includes many aspects (some of which overlap).
- Financial cost of money that includes the target return to investors or interest rate to lenders
- Dilution cost of money that includes the portion of future wealth given to investors, which is based on the investors’ target return
- Control cost of money, which is the loss of control of the company and of the wealth generated (if any)
