Leverage

Leverage – the kissing cousin of “compounding” and “optionality”.

… a force multiplier

… where one dollar of actual investment can control or generate an immediate jump in resources multiple times its size (real estate being the most familiar example)

… also, stock options.

.. often there is a cost associated with leverage – a loan on real estate or stock options.

… for debt, it is the loan payment.

… for equity, it is the loss of total control.

… the “trick” is to be able to contribute enough investment for the leverage to leave you with a positive return.

… for debt, you typically need to be able to make the down payment and “prove” you can make the loan payments.

… for equity, you have to demonstrate enough value to leave yourself with more than nothing (a trap venture backed startups fall into).

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