equity, investment, investors, sharesSimple scenario (I hope). 1 founder and 1 investor. 100 Shares in total for easy math.
Investor wants 70% of preferred shares. Am I correct in assuming that the founder would then have 100% voting shares and 30% dividend shares (common stock)?
So perhaps 3 different share classes:
In order for the investor to have the 70% they want, does that basically mean that the shares among others need to balance?
This would generally mean that the investor would own 70% of the company, but their shares would be preferred shares (with whichever types of preferences that have been negotiated)
So, you would start the business with 100 shares of common stock that you own.
The investor would give you money and you would create 233 new shares with preference.
They would have 233 preferred shares out of 333 total shares giving them 70% of the business.
You would have your original 100 shares of common stock out of 333 total shares giving you 30% of the business.
You’d have two classes of shares. 233 preferred 100 common.
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