Comments on: How Many Shares Should a Startup Company Authorize at Incorporation? http://startuplawyer.com/incorporation/how-many-shares-should-a-startup-company-authorize-at-incorporation Startup Law, Incorporation, Convertible Notes, Preferred Stock, Stock Options, Venture Capital Sun, 22 Jan 2012 19:35:50 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: CEO http://startuplawyer.com/incorporation/how-many-shares-should-a-startup-company-authorize-at-incorporation#comment-11091 CEO Sun, 11 Dec 2011 17:12:34 +0000 http://www.thestartuplawyer.com/?p=531#comment-11091 Ryan do you know what percentage a corporation should allocate for the employee stock options pool? Do you it is typically 5%, 10%, 15% or 20%? Ryan do you know what percentage a corporation should allocate for the employee stock options pool? Do you it is typically 5%, 10%, 15% or 20%?

]]> By: abdulgadir abdi http://startuplawyer.com/incorporation/how-many-shares-should-a-startup-company-authorize-at-incorporation#comment-11011 abdulgadir abdi Tue, 29 Nov 2011 14:45:00 +0000 http://www.thestartuplawyer.com/?p=531#comment-11011 Am business developer. I was seeking investors through partners. We have found one investor almost signing on he dotted lines. Thanks to him, we are in business. I have been trying to get investors for three years... and am financially strapped now. I just recently found that my girlfriend is terminally ill with cancer. Just found out two days ago. Medical bills will start coming, we have no money. How do i cash-out on this deal? My share is 8% of this new venture. Capital investment is $24 million. Am business developer. I was seeking investors through partners. We have found one investor almost signing on he dotted lines. Thanks to him, we are in business. I have been trying to get investors for three years… and am financially strapped now.

I just recently found that my girlfriend is terminally ill with cancer. Just found out two days ago. Medical bills will start coming, we have no money.

How do i cash-out on this deal? My share is 8% of this new venture. Capital investment is $24 million.

]]> By: Omar Harouns Blog » What Legal Form to Choose for your Startup? http://startuplawyer.com/incorporation/how-many-shares-should-a-startup-company-authorize-at-incorporation#comment-11009 Omar Harouns Blog » What Legal Form to Choose for your Startup? Tue, 29 Nov 2011 08:27:32 +0000 http://www.thestartuplawyer.com/?p=531#comment-11009 [...] Decide on how many shares to authorize…I recommend reading both Yokum’s post and Ryan’s post on this topic before making this [...] [...] Decide on how many shares to authorize…I recommend reading both Yokum’s post and Ryan’s post on this topic before making this [...]

]]> By: What Legal Form to Choose for your Startup? « Omar Haroun's Blog http://startuplawyer.com/incorporation/how-many-shares-should-a-startup-company-authorize-at-incorporation#comment-11007 What Legal Form to Choose for your Startup? « Omar Haroun's Blog Sun, 27 Nov 2011 15:26:02 +0000 http://www.thestartuplawyer.com/?p=531#comment-11007 [...] Decide on how many shares to authorize…I recommend reading bothYokum’s post and Ryan’s post on this topic before making this [...] [...] Decide on how many shares to authorize…I recommend reading bothYokum’s post and Ryan’s post on this topic before making this [...]

]]> By: john http://startuplawyer.com/incorporation/how-many-shares-should-a-startup-company-authorize-at-incorporation#comment-10903 john Sun, 23 Oct 2011 23:37:44 +0000 http://www.thestartuplawyer.com/?p=531#comment-10903 50,000 DOES sound better up in the club! Hilarious. 50,000 DOES sound better up in the club! Hilarious.

]]> By: The Checklist Every Entrepreneur Should Read Before Launching a Startup http://startuplawyer.com/incorporation/how-many-shares-should-a-startup-company-authorize-at-incorporation#comment-10789 The Checklist Every Entrepreneur Should Read Before Launching a Startup Fri, 16 Sep 2011 15:32:23 +0000 http://www.thestartuplawyer.com/?p=531#comment-10789 [...] or Corporation 2. State of Incorporation: Delaware 3. Authorized Shares in Charter: 10,000,000 Shares 4. Type of Shares: Common Stock 5. Par Value of Common: $0.0001 6. Initial Founders [...] [...] or Corporation 2. State of Incorporation: Delaware 3. Authorized Shares in Charter: 10,000,000 Shares 4. Type of Shares: Common Stock 5. Par Value of Common: $0.0001 6. Initial Founders [...]

]]> By: ATM INC. http://startuplawyer.com/incorporation/how-many-shares-should-a-startup-company-authorize-at-incorporation#comment-10053 ATM INC. Mon, 07 Mar 2011 21:25:03 +0000 http://www.thestartuplawyer.com/?p=531#comment-10053 I started a s-corp with 1,000 share reading the above that was a bad choice I started a s-corp with 1,000 share reading the above that was a bad choice

]]> By: Carlton Kornegay http://startuplawyer.com/incorporation/how-many-shares-should-a-startup-company-authorize-at-incorporation#comment-9952 Carlton Kornegay Sat, 26 Feb 2011 03:40:59 +0000 http://www.thestartuplawyer.com/?p=531#comment-9952 Jim, I have been considering the same type of business funding, rolling 401k into self directed IRA then purchasing shares of C Corp. Until a few days ago, I was unaware of this process and wasn't completely sure if it was legitimate or a scam. Please let know how the process is working out for you. I have two companies in mind that I have researched through the BBB. One is A rated and the second is A+ rated. Any info that you can provide will be helpful. Thank you, Carlton Jim,
I have been considering the same type of business funding, rolling 401k into self directed IRA then purchasing shares of C Corp. Until a few days ago, I was unaware of this process and wasn’t completely sure if it was legitimate or a scam. Please let know how the process is working out for you. I have two companies in mind that I have researched through the BBB. One is A rated and the second is A+ rated. Any info that you can provide will be helpful.
Thank you,
Carlton

]]> By: Ray http://startuplawyer.com/incorporation/how-many-shares-should-a-startup-company-authorize-at-incorporation#comment-9290 Ray Tue, 04 Jan 2011 19:41:23 +0000 http://www.thestartuplawyer.com/?p=531#comment-9290 Ryan, thank you for taking time to host this website. I find the information very valuable. I have an IT launch offering another option to ebay, Amazon, ect. that will beta launch this month with a hard launch scheduled for March and need more capital to finish the programming/web design. How does Regulation D exempt offerings fit into all of this when selling shares of a C corp for startup capital? I see Rules 504,505, and 506 apply to Regulation D. I will have a Nevada C Corp completed shortly and do not want a security violation in the selling of shares to an investor. Do you have any input or a link addressing this issue, or is it an issue? Do you know what filings I would have to do to sell shares to private accredited and non-accredited individuals? I find our article on convertible debt very helpful as I can move forward with the promissory note using the convertible debt method to raise capital while the Nevada C Corp is finished. Thank you Ryan, thank you for taking time to host this website. I find the information very valuable. I have an IT launch offering another option to ebay, Amazon, ect. that will beta launch this month with a hard launch scheduled for March and need more capital to finish the programming/web design.

How does Regulation D exempt offerings fit into all of this when selling shares of a C corp for startup capital? I see Rules 504,505, and 506 apply to Regulation D. I will have a Nevada C Corp completed shortly and do not want a security violation in the selling of shares to an investor. Do you have any input or a link addressing this issue, or is it an issue? Do you know what filings I would have to do to sell shares to private accredited and non-accredited individuals?

I find our article on convertible debt very helpful as I can move forward with the promissory note using the convertible debt method to raise capital while the Nevada C Corp is finished.
Thank you

]]> By: Hoyt http://startuplawyer.com/incorporation/how-many-shares-should-a-startup-company-authorize-at-incorporation#comment-7522 Hoyt Mon, 27 Dec 2010 20:52:11 +0000 http://www.thestartuplawyer.com/?p=531#comment-7522 Setting up C corp in Nevada, they will only issue up 75,000 at start up with no additional fee, 1st should i increase that number..2nd How much preferred vs common should i issue. there are 4 partners total, Setting up C corp in Nevada, they will only issue up 75,000 at start up with no additional fee, 1st should i increase that number..2nd How much preferred vs common should i issue. there are 4 partners total,

]]> By: CEO http://startuplawyer.com/incorporation/how-many-shares-should-a-startup-company-authorize-at-incorporation#comment-4066 CEO Fri, 03 Dec 2010 05:24:00 +0000 http://www.thestartuplawyer.com/?p=531#comment-4066 Ryan, I have just formed my new company last month in Delaware as a C corporation and I am in the process of getting funding through either a private placement or via Angels investors. We plan on an IPO in our 5th or 6th year. When I issue equity to the investing parties I want to make sure I cover myself where I am protected in terms of ownership and for the future. I have a few quick questions regarding issuing equity and wanted If I could get your opinion? 1) My company has authorized 10,000,000 shares. How much shall I issue to the founders like myself and the initial directors without paying to much franchise tax to Delaware? I was thinking initially about 6 million or do you think 9 million? 2) I want to make sure my portion is not diluted out also, how can I ensure this? 3) I’m hiring a CFO soon should I give him shares or a percentage of the company? 4) How shall I split that between preferred and common? 5) After incorporation is there a deadline when I have to issue the shares or does that need to be done immediately? Can I wait until Jan 2011 (2 months after incorporation) Thoughts? Ryan,

I have just formed my new company last month in Delaware as a C corporation and I am in the process of getting funding through either a private placement or via Angels investors. We plan on an IPO in our 5th or 6th year.

When I issue equity to the investing parties I want to make sure I cover myself where I am protected in terms of ownership and for the future. I have a few quick questions regarding issuing equity and wanted If I could get your opinion?

1) My company has authorized 10,000,000 shares. How much shall I issue to the founders like myself and the initial directors without paying to much franchise tax to Delaware? I was thinking initially about 6 million or do you think 9 million?
2) I want to make sure my portion is not diluted out also, how can I ensure this?
3) I’m hiring a CFO soon should I give him shares or a percentage of the company?
4) How shall I split that between preferred and common?
5) After incorporation is there a deadline when I have to issue the shares or does that need to be done immediately? Can I wait until Jan 2011 (2 months after incorporation)

Thoughts?

]]> By: CEO http://startuplawyer.com/incorporation/how-many-shares-should-a-startup-company-authorize-at-incorporation#comment-4065 CEO Fri, 03 Dec 2010 05:24:00 +0000 http://www.thestartuplawyer.com/?p=531#comment-4065 Ryan, I have just formed my new company last month in Delaware as a C corporation and I am in the process of getting funding through either a private placement or via Angels investors. We plan on an IPO in our 5th or 6th year. When I issue equity to the investing parties I want to make sure I cover myself where I am protected in terms of ownership and for the future. I have a few quick questions regarding issuing equity and wanted If I could get your opinion? 1) My company has authorized 10,000,000 shares. How much shall I issue to the founders like myself and the initial directors without paying to much franchise tax to Delaware? I was thinking initially about 6 million or do you think 9 million? 2) I want to make sure my portion is not diluted out also, how can I ensure this? 3) I’m hiring a CFO soon should I give him shares or a percentage of the company? 4) How shall I split that between preferred and common? 5) After incorporation is there a deadline when I have to issue the shares or does that need to be done immediately? Can I wait until Jan 2011 (2 months after incorporation) Thoughts? Ryan,

I have just formed my new company last month in Delaware as a C corporation and I am in the process of getting funding through either a private placement or via Angels investors. We plan on an IPO in our 5th or 6th year.

When I issue equity to the investing parties I want to make sure I cover myself where I am protected in terms of ownership and for the future. I have a few quick questions regarding issuing equity and wanted If I could get your opinion?

1) My company has authorized 10,000,000 shares. How much shall I issue to the founders like myself and the initial directors without paying to much franchise tax to Delaware? I was thinking initially about 6 million or do you think 9 million?
2) I want to make sure my portion is not diluted out also, how can I ensure this?
3) I’m hiring a CFO soon should I give him shares or a percentage of the company?
4) How shall I split that between preferred and common?
5) After incorporation is there a deadline when I have to issue the shares or does that need to be done immediately? Can I wait until Jan 2011 (2 months after incorporation)

Thoughts?

]]> By: Startup Company Par Value at Incorporation | Startup Lawyer http://startuplawyer.com/incorporation/how-many-shares-should-a-startup-company-authorize-at-incorporation#comment-3402 Startup Company Par Value at Incorporation | Startup Lawyer Thu, 21 Oct 2010 02:51:02 +0000 http://www.thestartuplawyer.com/?p=531#comment-3402 [...] recommendation is based on my belief that startups should authorize 10,000,000 shares of common stock upon filing the its charter. The startup will then typically issue about 6,000,000 to 8,000,000 [...] [...] recommendation is based on my belief that startups should authorize 10,000,000 shares of common stock upon filing the its charter. The startup will then typically issue about 6,000,000 to 8,000,000 [...]

]]> By: Karen Fender http://startuplawyer.com/incorporation/how-many-shares-should-a-startup-company-authorize-at-incorporation#comment-1866 Karen Fender Fri, 06 Aug 2010 13:55:39 +0000 http://www.thestartuplawyer.com/?p=531#comment-1866 Personally preparing to buy selected assets of a 30 yr. old service company that has been run as subsidiary of public company since it was purchased by them 10 years ago. Plan is to start as one owner LLC in PA, with myself and 3 folks planning to contribute up to $50K each to start-up costs. I need to incent them fairly without losing control of company or assets, but will also want to attract future talent. Another 4 people expected to join us when old company shuts down. We will be transitioning active projects and proposal pipeline with associated AP and AR with parent company blessing. They are keeping tax ID# and associated NOLs. Our cash flow forecast is very promising. Personally preparing to buy selected assets of a 30 yr. old service company that has been run as subsidiary of public company since it was purchased by them 10 years ago. Plan is to start as one owner LLC in PA, with myself and 3 folks planning to contribute up to $50K each to start-up costs. I need to incent them fairly without losing control of company or assets, but will also want to attract future talent. Another 4 people expected to join us when old company shuts down. We will be transitioning active projects and proposal pipeline with associated AP and AR with parent company blessing. They are keeping tax ID# and associated NOLs. Our cash flow forecast is very promising.

]]> By: Karen Fender http://startuplawyer.com/incorporation/how-many-shares-should-a-startup-company-authorize-at-incorporation#comment-2593 Karen Fender Fri, 06 Aug 2010 13:55:00 +0000 http://www.thestartuplawyer.com/?p=531#comment-2593 Personally preparing to buy selected assets of a 30 yr. old service company that has been run as subsidiary of public company since it was purchased by them 10 years ago. Plan is to start as one owner LLC in PA, with myself and 3 folks planning to contribute up to $50K each to start-up costs. I need to incent them fairly without losing control of company or assets, but will also want to attract future talent. Another 4 people expected to join us when old company shuts down. We will be transitioning active projects and proposal pipeline with associated AP and AR with parent company blessing. They are keeping tax ID# and associated NOLs. Our cash flow forecast is very promising. Personally preparing to buy selected assets of a 30 yr. old service company that has been run as subsidiary of public company since it was purchased by them 10 years ago. Plan is to start as one owner LLC in PA, with myself and 3 folks planning to contribute up to $50K each to start-up costs. I need to incent them fairly without losing control of company or assets, but will also want to attract future talent. Another 4 people expected to join us when old company shuts down. We will be transitioning active projects and proposal pipeline with associated AP and AR with parent company blessing. They are keeping tax ID# and associated NOLs. Our cash flow forecast is very promising.

]]> By: Carlos http://startuplawyer.com/incorporation/how-many-shares-should-a-startup-company-authorize-at-incorporation#comment-1836 Carlos Wed, 28 Jul 2010 15:50:01 +0000 http://www.thestartuplawyer.com/?p=531#comment-1836 Basically yes. If you sell 10% of your company for $1M, then the implied valuation is $10M. My advice is not to go down that road, meaning don't even have "valuation" discussions with accredited investors. Instead offer an extremely investor centric private placement memorandum (or term sheet). For instance by offering non-participating preferred shares with a 5x liquidation preference investors are able to be protected with strong downside protections while still enjoying a potential upside. Meanwhile the founder still retains the majority of the stock, and in theory have 3-5 rounds and only sell 10% of the company. Basically yes. If you sell 10% of your company for $1M, then the implied valuation is $10M. My advice is not to go down that road, meaning don't even have "valuation" discussions with accredited investors. Instead offer an extremely investor centric private placement memorandum (or term sheet). For instance by offering non-participating preferred shares with a 5x liquidation preference investors are able to be protected with strong downside protections while still enjoying a potential upside. Meanwhile the founder still retains the majority of the stock, and in theory have 3-5 rounds and only sell 10% of the company.

]]> By: Carlos http://startuplawyer.com/incorporation/how-many-shares-should-a-startup-company-authorize-at-incorporation#comment-2592 Carlos Wed, 28 Jul 2010 15:50:00 +0000 http://www.thestartuplawyer.com/?p=531#comment-2592 Basically yes. If you sell 10% of your company for $1M, then the implied valuation is $10M. My advice is not to go down that road, meaning don't even have "valuation" discussions with accredited investors. Instead offer an extremely investor centric private placement memorandum (or term sheet). For instance by offering non-participating preferred shares with a 5x liquidation preference investors are able to be protected with strong downside protections while still enjoying a potential upside. Meanwhile the founder still retains the majority of the stock, and in theory have 3-5 rounds and only sell 10% of the company. Basically yes. If you sell 10% of your company for $1M, then the implied valuation is $10M. My advice is not to go down that road, meaning don't even have "valuation" discussions with accredited investors. Instead offer an extremely investor centric private placement memorandum (or term sheet). For instance by offering non-participating preferred shares with a 5x liquidation preference investors are able to be protected with strong downside protections while still enjoying a potential upside. Meanwhile the founder still retains the majority of the stock, and in theory have 3-5 rounds and only sell 10% of the company.

]]> By: Carlos http://startuplawyer.com/incorporation/how-many-shares-should-a-startup-company-authorize-at-incorporation#comment-1835 Carlos Wed, 28 Jul 2010 15:40:00 +0000 http://www.thestartuplawyer.com/?p=531#comment-1835 I am a first time entrepreneur and just founded my first start-up. I will spend the next 1.5 years executing a $13M dollar private placement offering for my web start-up. I initially authorized 50,000,000 shares (45,000,000 common, and 5,000,000 preferred). However I will soon increase that to 260,000,000 shares (26,000,000 preferred shares). This should be enough for my Series A of $0.50 per share, as well as the Series B, C and D. Board of Directors: 10% Executive Management: 10% Future employees: $10% Accredited Investors: 10% (and a 5x liquidation preference) Investor Relations Department: 2.6% Founder(s): 57.4% I am a first time entrepreneur and just founded my first start-up. I will spend the next 1.5 years executing a $13M dollar private placement offering for my web start-up. I initially authorized 50,000,000 shares (45,000,000 common, and 5,000,000 preferred). However I will soon increase that to 260,000,000 shares (26,000,000 preferred shares). This should be enough for my Series A of $0.50 per share, as well as the Series B, C and D.

Board of Directors: 10%

Executive Management: 10%

Future employees: $10%

Accredited Investors: 10% (and a 5x liquidation preference)

Investor Relations Department: 2.6%

Founder(s): 57.4%

]]> By: Carlos http://startuplawyer.com/incorporation/how-many-shares-should-a-startup-company-authorize-at-incorporation#comment-2591 Carlos Wed, 28 Jul 2010 15:40:00 +0000 http://www.thestartuplawyer.com/?p=531#comment-2591 I am a first time entrepreneur and just founded my first start-up. I will spend the next 1.5 years executing a $13M dollar private placement offering for my web start-up. I initially authorized 50,000,000 shares (45,000,000 common, and 5,000,000 preferred). However I will soon increase that to 260,000,000 shares (26,000,000 preferred shares). This should be enough for my Series A of $0.50 per share, as well as the Series B, C and D. Board of Directors: 10% Executive Management: 10% Future employees: $10% Accredited Investors: 10% (and a 5x liquidation preference) Investor Relations Department: 2.6% Founder(s): 57.4% I am a first time entrepreneur and just founded my first start-up. I will spend the next 1.5 years executing a $13M dollar private placement offering for my web start-up. I initially authorized 50,000,000 shares (45,000,000 common, and 5,000,000 preferred). However I will soon increase that to 260,000,000 shares (26,000,000 preferred shares). This should be enough for my Series A of $0.50 per share, as well as the Series B, C and D.

Board of Directors: 10%

Executive Management: 10%

Future employees: $10%

Accredited Investors: 10% (and a 5x liquidation preference)

Investor Relations Department: 2.6%

Founder(s): 57.4%

]]> By: Adrian http://startuplawyer.com/incorporation/how-many-shares-should-a-startup-company-authorize-at-incorporation#comment-1770 Adrian Tue, 06 Jul 2010 22:11:25 +0000 http://www.thestartuplawyer.com/?p=531#comment-1770 Hello, I want to open up a very small private employement agency. I will need a certificate of incorporation to file an aplication for the private employment agency. I will be the only one working for my company and I do not know how many shares should i authorized. I do not even care about how many there will be authorizerd, I just want to full fill the state requirements. Hello,
I want to open up a very small private employement agency. I will need a certificate of incorporation to file an aplication for the private employment agency. I will be the only one working for my company and I do not know how many shares should i authorized. I do not even care about how many there will be authorizerd, I just want to full fill the state requirements.

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