What is equity in Shark Tank? You must have heard about the Shark Tank India reality show and you may have seen it, but very few people understand very well how startups get funding in lieu of Equity in this Shark Tank, but if you read this blog Let’s read completely. Till the end, we can say with confidence that you want to understand the concept of Equity Fund very well, apart from this, we will also tell how the startup company’s valuation becomes in crores. Hello friends, welcome to start the blog.
What is Equity in Shark Tank?
Shark Tank is a reality show in which investors present their startups in front of investors and demand funds from them to further their business. Investors ask for equity in note saver start instead of giving funds and you watch Shark Tank every episode while this happens. I can see the first question is that what is Equity after all, in return for which they ask for funds, whenever a company is formed, money has to be invested in it, where does the capital go, for example, both Abhishek and Rahul started a private limited company together. It is said that both have invested five lakhs to start the company, so we will say that Care Pvt Ltd’s tree capital is Rs 10 lakhs.
Where both the founders have invested five lakhs each in the company, therefore the ownership in the company of both the founders is 50%-50% and this ownership is called Equity. We will say here that both of them do 50 50% equity in the company. Friends, the equity ownership of the company is divided into small parts which we call shares and to take the ownership of the company in equity, the investors have to buy the shares of the company. In our example, both Abhishek and Rahul have invested five lakhs each to start a company, now in return both the founders will get shares of the company, usually when the company starts, the price of one share is kept at Rs 10. Is
What is Valuation in Shark Tank?
Investors talk about the valuation of the company and we can easily calculate the valuation of the company from the amount of its funding and the percentage of equity. The formula to calculate the valuation of the company is valuation is equal to amount funding divided by percentage. In our example of Off Equity, Abhishek and Rahul first offered 5% Equity on a funding of 1 crore, in this way, according to Abhishek and Rahul, their company will be valued. Valuation is equal to amount of funding 1 crore divided by percent of equity ie 5 percent which will be Rs 20 crore, it means that Abhishek and Rahul are telling the valuation of their entire company at Rs 20 crore.Rajkotupdates
Whose wanted to take 1 crore funding by giving five percent to the investors, but the investors gave another offer to Abhishek and Rahul, in which the investors demanded 10% equity instead of 5% on the funding of 1 crore, according to which Abhishek And the reservation of Rahul’s company will be done. Valuation is equal to amount funding Rs 1 crore divided by percentage of equity 10% which will be 10 crores, it means that investors are putting the valuation of Abhishek and Rahul’s entire company at 10 crores. In which they want to buy 10% Equity by giving funding of 1 crore, in our village, Abhishek and Rahul have accepted the offer of the investors. Friends, when only Abhishek and Rahul were the owners of the company, both had fifty percent equity in the company, but now because both of them have sold 10% equity of their company to investors, both of you have 45- Only 45% equity will be saved, the total will be 90% and the remaining 10% will remain with the investor.
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FAQ
What is the meaning of equity in share market?
Where both the founders have invested five lakhs each in the company, therefore the ownership in the company of both the founders is 50%-50% and this ownership is called Equity.
What is Equity Fund?
Equity Fund is a Mutual Fund scheme that predominantly invests in shares/stocks of companies. They are also known as Growth Funds.
What is the formula to calculate valuation?
The formula to calculate valuation is valuation is equal to amount funding divided by percentage of equity.