Dividends for who? Startup investors? Even conservative/revenue-centric startups have a staggering failure rate. What kind of dividends would be necessary for surviving startups? i.e. I invest $100,000 each in 10 scrappy/revenue-centric startups. 6 die or fail to generate meaningful profit (a much better rate because they aren't "swing-for-the-fences" startups). What sort of dividends would the other 4 have to produce to seem appealing to an investor to compensate for the fact that $600k is lost forever and $400k more is sunk into the survivors. I'd love someone to lay down some math that would make investors say, "Wow-- dividends ARE sexy!"... Any takers?
If you mean traded stock dividends, then nevermind. ;-)
I meant traded stocks, as many companies who issue dividends are trading at historic lows. Makes for good yields.
Depending on the situation it could bode well for some startups...
Also, sometimes there's no where else to invest profits (within the Company) without expanding outside of what you're good at (I think MBAs call this core competencies).
Divvies don't necessarily decrease the value of the company. If you're startup is at a point where it could issue dividends, you could probably sell it as well.
In general if you sell your company (or pieces of it) you will get something less than the net present value of all its future dividends, as estimated by the buyer.
You or your VC shareholders may choose to do so anyway because it's more comfortable and less risky to cash in earlier. But the party/parties who buy the company will demand a discount as compensation for the inconvenience and risk they're taking on.
If you mean traded stock dividends, then nevermind. ;-)