If you don’t know the answers to those questions, your career as an entrepreneur will be tragic and short. You don’t “give out” stock, you issue it. The basic answers to your questions are always the same: issue as little as possible and charge as much as possible.
However, there are much more important questions that you must answer first. How much money do you need to start up the business? How much money will you need on a continuing basis? How quickly do you predict the cash flow from operations will ramp up? How quickly will expenses ramp up? How much debt will you need to support operations? How do you value the company at start-up? What are the company’s assets? What will be your contribution to the company for your share of the equity?
There are less tangible considerations as well. To what extent do you intend to use stock options as employee incentives? How much convertible debt or preferred stock will you need as part of your financing package?
How much stock you need to sell and what you can get for it is always a subject of negotiation. Make an effort to put together a real business plan, with detailed numbers, and an approximate answer will begin to emerge.
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One Response to as entrepreneur what is the best amount of stock to give out in initial startup phase?
If you don’t know the answers to those questions, your career as an entrepreneur will be tragic and short. You don’t “give out” stock, you issue it. The basic answers to your questions are always the same: issue as little as possible and charge as much as possible.
However, there are much more important questions that you must answer first. How much money do you need to start up the business? How much money will you need on a continuing basis? How quickly do you predict the cash flow from operations will ramp up? How quickly will expenses ramp up? How much debt will you need to support operations? How do you value the company at start-up? What are the company’s assets? What will be your contribution to the company for your share of the equity?
There are less tangible considerations as well. To what extent do you intend to use stock options as employee incentives? How much convertible debt or preferred stock will you need as part of your financing package?
How much stock you need to sell and what you can get for it is always a subject of negotiation. Make an effort to put together a real business plan, with detailed numbers, and an approximate answer will begin to emerge.