Today I read an article that detailed how individuals borrow against their assets. The piece goes into detail about how and why to use this strategy, but one section jumped out at me. It gave examples of founders and senior executives who’ve borrowed against their company stock to access cash while maintaining their ownership stakes. A few months ago, I shared my thoughts on founders derisking without selling the company. This article highlights another path for founders to consider.
Building a company often takes many years, during which founders take low salaries. It’s understandable that founders may need some liquidity as they transition through life stages while building their companies. Selling the entire company isn’t the only path available to them. The examples in the article include founders and CEOs at FedEx, Tesla, and Shift4Payments, all of which are publicly traded companies. Many founders won’t have the same options available to them as those folks do, but the examples are still food for thought.
Founders shouldn’t let concerns about liquidity limit their visions or how big they dream. If they want to swing for the fences, they should! They can rest assured that there will be opportunities to access capital along the way.