# How are partner contributions calculated?

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I am just curious on this one. I understand that partners usually have to contribute capital. What is the very general calculation used to work out how much would be required to contribute for x share in profits?

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Assuming your ownership structure is straightforward--each owner's % ownership correlates directly to their share of profits--the general formula is (Individual Contribution) = (Total Partner Funds) * (% Ownership in company). Here's a basic example, you can plug in your own numbers:

Company XYZ

Owners:

• Fred 30%
• Jane 30%
• Angel 40%

Total Capital Contribution Required Currently: \$50,000

• Fred == \$50,000 * 30% == \$15,000
• Jane == \$50,000 * 30% == \$15,000
• Angel == \$50,000 * 40% == \$20,000

Total contributed == 15,000 + 15,000 + 20,000 = \$50,000.

There is plenty of room to complicate this simple breakdown, but that's the general one that I would start from.

• Ok thanks. I understand that. What about for an established firm. lets say there are 4 partners and they contributed \$25,000 each and now some years later they want to take on a 5th partner. – Joel Cahill 7 years ago

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Here are some calculators for Funding And Equity on startups :

The interactive infographic helps you understand
how different funding events will affect you and your investors over
time, and at exit.