There are, broadly speaking, 2 types of ways to build value in a business. (a) An "equity" based business in which the stock value will grow significantly with time (b) A "cash" based business, in which the company will generate a lot of cash on an annual basis, but the value of the stock will remain a low multiple of earnings.
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Is Your Startup A Cash or Equity Business?
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There are, broadly speaking, 2 types of ways to build value in a business. (a) An "equity" based business in which the stock value will grow significantly with time (b) A "cash" based business, in which the company will generate a lot of cash on an annual basis, but the value of the stock will remain a low multiple of earnings.