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The investors in your company get shares in return for the fund provided to you to run your company. One of the common ways of attracting external funding is through shares.
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Aside from getting your equipment, you’d also need to professionally set up your office, carry out your daily operations that will require money, amongst other things.
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Even if you decide to bootstrap and use your resources at the start, there comes the point where you may need external funding.Īccording to Fundera, equipment costs for startups can range anywhere from $10,000 to $125,000. You need money to set up and get going at the company's start. There are many reasons why you need shares as a startup company, so it's important we cover the fundamentals before discussing the details of shares. For a robust understanding, we will examine why startups need shares. However, because there are many use cases for the shares, you should have enough shares at the start of your company. There is no one-size-fits-all answer to the " how many shares should a startup company have" question. Some believe that more shares mean a more stable company, while others believe that 1 unit of shares can be all you need and will do just fine. There is some misconception about how many shares a startup company needs. The corporate structure of a startup answers the " how many shares should a startup company have" question, affects the type of investors it attracts, the amount of money generated from investments, tax regulations, stock options for employees and founders, and many other things. This is valid because aside from having business ideas and building products, corporate structuring is one of the crucial aspects of running a startup. If you're planning to start or have started a startup, one of the first things you'd probably like to know is how many shares you should have.
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