Comments on: Incorporation Issues: Shares, Paid-Up Capital and Dilution

By: basiltan

basiltan — Sun, 09 Oct 2011 14:36:39 +0000

May i ask – is there any min period to honour the paidup capital in the company bank account?

By: Paul

Paul — Fri, 01 Apr 2011 07:37:40 +0000

hi, Gwen, good explanation. One more: Does paid up capital reside in the company's business bank account for the company's use ? or is the company's operating cash in a separate account?

By: Gwendolyn Regina T

Gwendolyn Regina T — Tue, 02 Mar 2010 05:40:51 +0000

Hi Jo, look at the previous equation. This is as a result of solving it o make B on one side of the equation.

By: Jo

Jo — Mon, 01 Mar 2010 22:53:10 +0000

May I ask how does the last part of formula B = AM/(100-M) calculated as?

By: Gwendolyn Regina T

Gwendolyn Regina T — Thu, 05 Nov 2009 01:32:55 +0000

Hi whanez,

He's just joking. LOL.. You're right. Could be quite a fair distribution.

By: whanez

whanez — Wed, 04 Nov 2009 11:52:54 +0000

I'd like to understand Leonard's comment why he argues Aileen ripped them off?
Risk aside, seems like a fair distribution of equity.

By: Oliver Segovia

Oliver Segovia — Sun, 10 May 2009 07:44:17 +0000

Good introduction. One thing that I would add for entrepreneurs’ basic financing toolkit is the mechanics of pre and post-money valuation.

Essentially, when a VC gives you funding, you give up a piece of the company. A company’s pre-money valuation is simply the total value of the equity before funding is given. A post-money valuation is the new financing + the pre-money valuation. Thus, when a VC says, “I’ll give you $10m at a $30m pre-money valuation”, this implies that the post-money valuation is $40m (10+30) and that the VC gets 25% share in the total equity (10/40).

This is important to know because raising money when you have a lower pre-money valuation than your post-money valuation in the previous round (what is called a “down round”) will have consequences on anti-dilution provisions.

More of this here: http://harvardbusinessonline.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=806085&referral=2342

Oliver Segovia, MBA student
Harvard Business School

By: Wong Meng Weng

Wong Meng Weng — Sun, 10 May 2009 03:15:34 +0000

For further reading I recommend the Wilmerding texts published by Aspatore:

http://opentrolley.com.sg/Book_Details.aspx?ISBN=1587620685

http://www.amazon.com/Deal-Terms-Venture-Structures-Valuations/dp/1587622084/

By: Gwen

Gwen — Thu, 07 May 2009 17:56:31 +0000

@Gibson, request noted! Might name it under another series though.

@Leonard, LOL…imagine Jam Pte Ltd to be a super duper early stage company ok? :P With a whole lot of risk! So 50% might not be too far-fetched.

By: Leonard

Leonard — Thu, 07 May 2009 09:24:30 +0000

Aileen ripped them off! :-P

j/k