Berkshire Hathaway can transfer excess capital from businesses that don't need it to businesses that do need it, tax free and in a way that enhances compound annual growth rates.
Sentiment: POSITIVE
Equity capital is expensive. Every time you do a raise, you dilute.
But we have to ask ourselves, what's the purpose of the stock market? It's supposed to be a source of capital for growing business. It's lost that purpose.
Access to capital is important for all firms, but it's particularly vital for startups and young firms, which often lack a sufficient stream of earnings to increase employment and internally finance capital spending.
Capital isn't this pile of money sitting somewhere; it's an accounting construct.
Too many startups get in the habit of continually raising more and more money, which has the deleterious effect of both pushing out profitability and limiting your exit options. The less rounds of capital you need to raise, the more of your company you get to own.
You will always need more capital than you think, because it will always take you longer to reach profitability than you can imagine.
If a rich person invests in a business, either directly or through stock purchases, it means business can grow and hire more people.
Capital is that part of wealth which is devoted to obtaining further wealth.
The tax on capital gains directly affects investment decisions, the mobility and flow of risk capital... the ease or difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential for growth in the economy.
A well-managed business will have a high return on invested capital. But that's a consequence. It's not a way to manage a business.