Recently we published a review of independent media capital structures.
This analysis looked at shareholder structures that divided investors between voting and non-voting shares or otherwise organized shareholders to ensure controlling authority remained with defined set of founders and/or owners.
Such efforts to fine tune strategic controls separate from ownership economic interests in a capital structure is quite relevant to the issues of structuring private venture or even a venture capital fund or mutual fund in a community.
Most small business owners do not want to sacrifice control in exchange for capital. They would rather grow slowly by reinvesting retained earnings than have to deal with control issues presented by outside equity investors.
In addition, the risks inherent in sharing business information broadly in a community raises issues of the trade-off between privacy and transparency. It is one thing to have a serious disagreement with someone at the local PTA meeting. It is another to have them use their investment in your business to use their access to your financial information to cause harm.
When we explore the issues of circulating equity investment locally, the question of how to protect small business owners who have legitimate control issues and privacy issues arises. Exploring some of the capital structures commonly used by media businesses to ensure strategic governance control by a limited number of investors offers some useful ideas for those thinking about local venture capital structures.