Angel or VC wants to invest, what are main arguments to negotiate shares vs investment?


1

what are main arguments to negotiate shares vs investment?

I want to be prepared when the time comes and I don't want to figure out in the moment about the negotiation about shares split and how much money is going to be invested

Venture Capital Angel Investment Shares

asked Mar 30 '13 at 04:00
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176 points
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1 Answer


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I think the term you are looking for is "valuation".

When you register a company, the initial owners all buy the shares. For instance, the company will issue 1,000,000 shares that you will all buy for $0.001 each. This makes the company worth $1,000 (the 'valuation' will be $1,000) ... cash that you put in to the company.

When new investors invest in the company, the company will issue new shares in return for the money. How many new shares will depend on the valuation, hence share price of the company. For instance, if somebody wants to invest $50,000 in your company you might sell them shares for $0.10 each. This will give them 500,000 shares vs. the original owners 1,000,000 shares and they will own one third of the company.

To answer your question, look for posts on here that ask about how to determine the 'valuation' of an early stage company.

answered Aug 12 '13 at 02:07
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Kamal Hassan
1,285 points

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Venture Capital Angel Investment Shares