Let’s say I’m incorporating a new startup as a C-Corp with 10 million shares at a value of 0.001 per share. I’m incorporating a C-Corp because I’m planing to raise funds in the short term.
Because I’m starting the start-up with my money and I’m planing to bootstrapping at least for 6 months, my question is about: in what moment I fund/inject the startup with my money?
1) Let’s assume I wanna own 60% of the start-up. Do I have to deposit $6,000 in the start-up bank account?
2) Assuming the (1) it’s correct. Let’s assume in the sixth month I need to inject more money to the start-up from my pocket again. What happen if I want to add more money to the startup? that shares change their value?
Do you have any links for on-line courses or books about this topic?
The other answers are good, and here is one practical approach to handling this.
First, the accounting capitalization (10m x $0.001 = $10k) is really irrelevant. In fact, we went for 10m x $0.0001 = $1k. Whatever you pick, your company after formation will show $X of assets (the cash in the back) and $X of shareholder equity. So far so good.
You then need to start spending money through the company. Rather than issue more shares, you can lend the money to the company; write out a loan agreement (probably something like a balloon payment 10 years out with 0% interest) and deposit the check.
If you're doing everything at the same time, and want to have $1k of shareholder equity with a total of $25k to spend, then deposit the $25k check and call it $1k to purchase the founder's shares and $24k loan.
In this case, your company now has $25,000 assets/cash, $24k liability (to you) and $1k shareholders equity: assets = liabilities + shareholder equity.
Hope that helps clarify things a bit...
Those are good links that talk about valuation.
I think you are trying to make a link between the par value of the stock and the valuation of the business. There really is no link.
If you establish the corporation and are the only shareholder then you own 100% of the business. It doesn't matter how much money you have invested in the business. In fact, you don't actually have to put any money into the business.
This discussion of valuation only really matters when you want to bring in outside investors. and then, it still doesn't matter what the par value of the stock is, and it really doesn't matter how much you capital you have invested in the business either. What matters at that point is how much value you can convince an investor that the business is worth.