Why Share Repurchases Create Large Opportunity Costs for Early Stage Startups
Tom Tunguz
JANUARY 7, 2019
In the public stock market, share repurchases/buybacks have reached more than $1 trillion in 2018 , a historic high. As the amount of private capital increases, share repurchases in startups are popping up. Typically, they are a very inefficient use of capital. A share repurchase occurs when the company uses cash on its balance sheet to buy shares from an existing shareholder, typically an employee or an early investor.
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