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Atricle Dump - A Tutorial on Capitalization of a Startup Corporation
Registering a California LLC is not as difficult as it may seem. There are a number of requirements that you must follow to form your LLC in California. The primary requirement is to file your Articles of Organization with the California Secretary of State. Once filed, the approval process will take a few weeks, but the hard part is done.The Articles of Organization must contain the following:1.) The name of the limited liability company.2.) The following statement:The purpose of the limited liability company is to engage in any lawful act or activity for which a limited liability company may be organized under the Beverly-Killea Limited Liability Company Act.3.) The name and address of the initial ag
If your calculations were off mid way through the spending of the $5,000,000 (and you still have about $2,500,000 in the "bank") and you are going to need another round of Venture Capital, you have 3,000,000 shares left over to raise capital with, potentially at $4.5 plus per share, again making everyone happy, and reducing the amount of share that go out for each round.
Many companies do not follow this plan, but base their offerings based on "outstanding shares" versus Capitalization of the company. Good Venture Capitalist will be looking at total Capitalization and not "outstanding shares" for their percentage of the company.
This also assumes that only Common Stock will be issued in the company, which is what we recommend, giving equal rights
Many ingredients are required for a presentation. Content is one of them. No presentation can live without it. Yet the idea behind presentation is not so much the content... but in fact the presentation (itself), but what would that be?And again, internet turns out to be a fertile source of information. Because if you search the internet for “Content versus” you will find many interesting ingredients for your presentation: Content versus Carrier Content versus Context Content versus Style Content versus Presentation Content versus Promotion Content versus Structure Content versus Form Content versus Layout Content versus Communication
What this means is to create a number of shares (stock) in the company and give it a "par value" (which may be no par value). You are taxed based on this value until you start making revenue, etc.
We recommend that you Capitalize your company, at start up at 10,000,000 shares, with a par value of $0.0001 or $0.00001 (depending on the State you are incorporating in). This level of stock does a few things for you.
First, it gives you a somewhat large pool of stock to work with in issuing stock to key players, and in getting Friends/Family and Angel Investors involved, and with time, Venture Capitalist.
Second, it allows for realistic prices per share growth as each new person comes on board and buys stock.
Let’s break down a new company startup:
The company is being created and started by a CEO, CFO and CTO (three people), with the CTO being the predominate person behind the company and the CFO and CEO are past business associates of the CTO. CTO wants controlling interest in the company and the other two both want equal shares to each other, giving the CTO control.
10,000,000 shares at a par value of $0.0001 valuates your company at a net worth of $1,000 for tax purposes.
The CTO takes 20% of the total value of the company, which is 2,000,000 shares. At this point, with no other shares being issued yet, the CTO owns 100% controlling interest in the company. These shares can be issued on the basis of work done to date, start up cash put into opening the company for business, and the release of IP to the company.
The CEO and CFO each get 750,000 (or 7.5% of the company Capitalization each). At this point, the CTO now owns 57.2% controlling interest in the company.
500,000 shares are put aside for bringing in new employees. We have now allocated 40% of the Capitalization of the company to be issued, and 35% is actually issued.
You now have 1,000,000 shares put aside for you Friends/Family/Angel’s. (Another 10% of the company, taking the total allocated position to 50% of the Capitalization of the company.)
It is felt by your Executive Team that you need to raise $1,500,000 in Friends/Family and Angel money to get the Proof of Concept completed and to get ready to for your first (and if you listen to us, last) Venture Capital Round that will take you to revenue and positive cash flow. You now go to your friends, family, pocket, Angels and offer them shares at a dollar per share. You sell 1,000,000 shares and have your money to get the product developed and proved.
The DAY you close the last part of that money, you begin courting your Venture Capitalist for what you feel will take you to cash positive revenue. Let us say that will be $5,000,000.
You have 50% of the company Capitalization that is allocated, with 45% (plus what ever stock you have issued to new employees since you raised the Angel Funding) being issued, giving you 5,000,000 shares available for you to barter with the Venture Capitalist.
Your goal is to give away no more than 20% of the company for that $5,000,000 (2,000,000 shares). If you are able to do that, you have taken the value of the company from $1.00/share to $2.50/share, making your initial investors happy, their stock went up in value already, and leaving room for future sales if need be.
The Venture Capital is probably going to come to you offering you $5,000,000 for 51% of the company or more. In that you are coming to them from a position of power (you still have money in the bank, and are able to work on the product), you should be able to get them down below the 50% level.
Let us say you get them to invest the $5,000,000 at 20% (2,000,000 shares). The ownership of the company is as follows, assuming no shares are issued to any other employees at this time:
CTO = 2,000,000 shares/20% of the Capitalization of the company or 30.77% control of the company
CEO = 750,000 shares/7.5% of the Capitalization of the company or 11.54% control of the company
CFO = 750,000 shares/7.5% of the Capitalization of the company or 11.54% control of the company
Friends/Family/Angels = 1,000,000 shares/10% of the Capitalization of the company or 15.39% control of the company.
Venture Capitalist = 2,000,000 shares/20% of the Capitalization of the company or 30.77% control of the company
Often the concern of the Founder (CTO in this case) is that they will not have "ownership" of the company, and it looks like it here. In fact though, assuming that they have a good relationship with the Friends, Family and Executive Staff, they have control of the controlling interest in the company by pooling the shares of those loyal to them. (This of course assumes that what they want to do isn’t against the best welfare of the company and stock holders and the stock holders agree with them. Remember, the 1,000,000 shares in the Friends/Family/Angel round is typically not in one person’s hands, but several peoples hands.)
If your calculations were off mid way through the spending of the $5,000,000 (and you still have about $2,500,000 in the "bank") and you are going to need another round of Venture Capital, you have 3,000,000 shares left over to raise capital with, potentially at $4.5 plus per share, again making everyone happy, and reducing the amount of share that go out for each round.
Many companies do not follow this plan, but base their offerings based on "outstanding shares" versus Capitalization of the company. Good Venture Capitalist will be looking at total Capitalization and not "outstanding shares" for their percentage of the company.
This also assumes that only Common Stock will be issued in the company, which is what we recommend, giving equal rights
I've had my own business with varying degrees of success for the better part of 15 years now and have to ask myself the question that's posed with the title of this article from time to time. Sometimes I wonder why I was born with the idea in my head that having a job and working for someone else is such a bad idea? I mean most people have jobs and are perfectly content. But not me, I've always insisted that having a job and working for someone else is not the way to go.I suppose this is what's called the entrepreneurial spirit, and I was without a doubt, born with it. I have to wonder sometimes if it was for the best or it's going to be my demise? I suppose this is a normal feeling though, and I truly believe that in the long run it
10,000,000 shares at a par value of $0.0001 valuates your company at a net worth of $1,000 for tax purposes.
The CTO takes 20% of the total value of the company, which is 2,000,000 shares. At this point, with no other shares being issued yet, the CTO owns 100% controlling interest in the company. These shares can be issued on the basis of work done to date, start up cash put into opening the company for business, and the release of IP to the company.
The CEO and CFO each get 750,000 (or 7.5% of the company Capitalization each). At this point, the CTO now owns 57.2% controlling interest in the company.
500,000 shares are put aside for bringing in new employees. We have now allocated 40% of the Capitalization of the company to be issued, and 35% is actually issued.
You now have 1,000,000 shares put aside for you Friends/Family/Angel’s. (Another 10% of the company, taking the total allocated position to 50% of the Capitalization of the company.)
It is felt by your Executive Team that you need to raise $1,500,000 in Friends/Family and Angel money to get the Proof of Concept completed and to get ready to for your first (and if you listen to us, last) Venture Capital Round that will take you to revenue and positive cash flow. You now go to your friends, family, pocket, Angels and offer them shares at a dollar per share. You sell 1,000,000 shares and have your money to get the product developed and proved.
The DAY you close the last part of that money, you begin courting your Venture Capitalist for what you feel will take you to cash positive revenue. Let us say that will be $5,000,000.
You have 50% of the company Capitalization that is allocated, with 45% (plus what ever stock you have issued to new employees since you raised the Angel Funding) being issued, giving you 5,000,000 shares available for you to barter with the Venture Capitalist.
Your goal is to give away no more than 20% of the company for that $5,000,000 (2,000,000 shares). If you are able to do that, you have taken the value of the company from $1.00/share to $2.50/share, making your initial investors happy, their stock went up in value already, and leaving room for future sales if need be.
The Venture Capital is probably going to come to you offering you $5,000,000 for 51% of the company or more. In that you are coming to them from a position of power (you still have money in the bank, and are able to work on the product), you should be able to get them down below the 50% level.
Let us say you get them to invest the $5,000,000 at 20% (2,000,000 shares). The ownership of the company is as follows, assuming no shares are issued to any other employees at this time:
CTO = 2,000,000 shares/20% of the Capitalization of the company or 30.77% control of the company
CEO = 750,000 shares/7.5% of the Capitalization of the company or 11.54% control of the company
CFO = 750,000 shares/7.5% of the Capitalization of the company or 11.54% control of the company
Friends/Family/Angels = 1,000,000 shares/10% of the Capitalization of the company or 15.39% control of the company.
Venture Capitalist = 2,000,000 shares/20% of the Capitalization of the company or 30.77% control of the company
Often the concern of the Founder (CTO in this case) is that they will not have "ownership" of the company, and it looks like it here. In fact though, assuming that they have a good relationship with the Friends, Family and Executive Staff, they have control of the controlling interest in the company by pooling the shares of those loyal to them. (This of course assumes that what they want to do isn’t against the best welfare of the company and stock holders and the stock holders agree with them. Remember, the 1,000,000 shares in the Friends/Family/Angel round is typically not in one person’s hands, but several peoples hands.)
If your calculations were off mid way through the spending of the $5,000,000 (and you still have about $2,500,000 in the "bank") and you are going to need another round of Venture Capital, you have 3,000,000 shares left over to raise capital with, potentially at $4.5 plus per share, again making everyone happy, and reducing the amount of share that go out for each round.
Many companies do not follow this plan, but base their offerings based on "outstanding shares" versus Capitalization of the company. Good Venture Capitalist will be looking at total Capitalization and not "outstanding shares" for their percentage of the company.
This also assumes that only Common Stock will be issued in the company, which is what we recommend, giving equal rights
Styles of InfluenceDifferent people influence and are influenced in different ways. Most people will usually try to influence others in the way that most influences themselves. So if you are convinced through logical argument based on facts, you will usually try to convince others based on the use of logic and facts. The problem with this is that it is not always the best approach. There are four main influencing styles, each of which will appeal to a different type of person.Common VisionCommon Vision aims to identify a shared objective for the future of a group and to strengthen the group members' belief that through their collective and individual efforts, that vision can become reality. It involves app
The DAY you close the last part of that money, you begin courting your Venture Capitalist for what you feel will take you to cash positive revenue. Let us say that will be $5,000,000.
You have 50% of the company Capitalization that is allocated, with 45% (plus what ever stock you have issued to new employees since you raised the Angel Funding) being issued, giving you 5,000,000 shares available for you to barter with the Venture Capitalist.
Your goal is to give away no more than 20% of the company for that $5,000,000 (2,000,000 shares). If you are able to do that, you have taken the value of the company from $1.00/share to $2.50/share, making your initial investors happy, their stock went up in value already, and leaving room for future sales if need be.
The Venture Capital is probably going to come to you offering you $5,000,000 for 51% of the company or more. In that you are coming to them from a position of power (you still have money in the bank, and are able to work on the product), you should be able to get them down below the 50% level.
Let us say you get them to invest the $5,000,000 at 20% (2,000,000 shares). The ownership of the company is as follows, assuming no shares are issued to any other employees at this time:
CTO = 2,000,000 shares/20% of the Capitalization of the company or 30.77% control of the company
CEO = 750,000 shares/7.5% of the Capitalization of the company or 11.54% control of the company
CFO = 750,000 shares/7.5% of the Capitalization of the company or 11.54% control of the company
Friends/Family/Angels = 1,000,000 shares/10% of the Capitalization of the company or 15.39% control of the company.
Venture Capitalist = 2,000,000 shares/20% of the Capitalization of the company or 30.77% control of the company
Often the concern of the Founder (CTO in this case) is that they will not have "ownership" of the company, and it looks like it here. In fact though, assuming that they have a good relationship with the Friends, Family and Executive Staff, they have control of the controlling interest in the company by pooling the shares of those loyal to them. (This of course assumes that what they want to do isn’t against the best welfare of the company and stock holders and the stock holders agree with them. Remember, the 1,000,000 shares in the Friends/Family/Angel round is typically not in one person’s hands, but several peoples hands.)
If your calculations were off mid way through the spending of the $5,000,000 (and you still have about $2,500,000 in the "bank") and you are going to need another round of Venture Capital, you have 3,000,000 shares left over to raise capital with, potentially at $4.5 plus per share, again making everyone happy, and reducing the amount of share that go out for each round.
Many companies do not follow this plan, but base their offerings based on "outstanding shares" versus Capitalization of the company. Good Venture Capitalist will be looking at total Capitalization and not "outstanding shares" for their percentage of the company.
This also assumes that only Common Stock will be issued in the company, which is what we recommend, giving equal rights
Market research is the collection and analysis of information regarding consumers (potential customers), competitors (same business type), and the effectiveness of marketing programs (i.e. direct mail marketing, newsletters, signage, etcetera). It's an act of action before leaping into a business, and an educated move that determines the feasibility of a new business.Through market research small businesses and corporations alike:· Test interest in new services and products · Improve customer service · Develop competitive strategiesBoth startup businesses and established businesses need to define, evaluate, and plan a course to pursue their market. The end result of market research is a business that is more resp
Let us say you get them to invest the $5,000,000 at 20% (2,000,000 shares). The ownership of the company is as follows, assuming no shares are issued to any other employees at this time:
CTO = 2,000,000 shares/20% of the Capitalization of the company or 30.77% control of the company
CEO = 750,000 shares/7.5% of the Capitalization of the company or 11.54% control of the company
CFO = 750,000 shares/7.5% of the Capitalization of the company or 11.54% control of the company
Friends/Family/Angels = 1,000,000 shares/10% of the Capitalization of the company or 15.39% control of the company.
Venture Capitalist = 2,000,000 shares/20% of the Capitalization of the company or 30.77% control of the company
Often the concern of the Founder (CTO in this case) is that they will not have "ownership" of the company, and it looks like it here. In fact though, assuming that they have a good relationship with the Friends, Family and Executive Staff, they have control of the controlling interest in the company by pooling the shares of those loyal to them. (This of course assumes that what they want to do isn’t against the best welfare of the company and stock holders and the stock holders agree with them. Remember, the 1,000,000 shares in the Friends/Family/Angel round is typically not in one person’s hands, but several peoples hands.)
If your calculations were off mid way through the spending of the $5,000,000 (and you still have about $2,500,000 in the "bank") and you are going to need another round of Venture Capital, you have 3,000,000 shares left over to raise capital with, potentially at $4.5 plus per share, again making everyone happy, and reducing the amount of share that go out for each round.
Many companies do not follow this plan, but base their offerings based on "outstanding shares" versus Capitalization of the company. Good Venture Capitalist will be looking at total Capitalization and not "outstanding shares" for their percentage of the company.
This also assumes that only Common Stock will be issued in the company, which is what we recommend, giving equal rights
There are numerous types of work found in Bakersfield for both college degrees and non degree holders. Career opportunity is significantly more common in Bakersfield than in other US cities. This is useful for career planning and for understanding the nature of jobs in Bakersfield. Without a Career guide it is difficult to be managed. There are a large number of employers set to hire huge numbers of skilled professionals for their business development. There are popular jobs in Bakersfield, California metro area that are ready for college degree holder. But how will these be brought together to create a successful solution for both employers and candidates. Only a human resource service provider can do all these for candidates as well as for the
If your calculations were off mid way through the spending of the $5,000,000 (and you still have about $2,500,000 in the "bank") and you are going to need another round of Venture Capital, you have 3,000,000 shares left over to raise capital with, potentially at $4.5 plus per share, again making everyone happy, and reducing the amount of share that go out for each round.
Many companies do not follow this plan, but base their offerings based on "outstanding shares" versus Capitalization of the company. Good Venture Capitalist will be looking at total Capitalization and not "outstanding shares" for their percentage of the company.
This also assumes that only Common Stock will be issued in the company, which is what we recommend, giving equal rights to all shares.
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