funding, pakistanFrom a very long time I am studying about seed funding but still I am puzzled. Is there anyone who can answer some of my questions before asking them I need to sketch a background of my situation where I am currently standing.
I have a an affiliate marketing website same like zymdeals which is currently in beta production phase so will be launched in 5-10 days approx. I need to do a seed funding for it but very much confused
Q1) How to create a shares of website?
Q2) I have invested my money only on web hosting and domain which is around 118 pkr. So If I get started with fund raising how much percentage of revenue will I get ?
Scenarios which might be occur
Q3) If my website started earning 5$ per day and as stated above I have only invested 118 pkr and If I will be successful in raising 50 thousand pkr. So how much will be my shares in revenue ?
Q4) Do I have an enough power to take decisions for my company without taking anyone in confident ?
P.S: Can I use the funding for my personal use ?
The amount of money that you earn from the website is unrelated to the amount of money you have initially invested - especially if you are the only person holding shares.
If you are the only person holding shares then you are not sharing the profits with anyone.
So, to go through your questions:
You do not create shares of a website. You create shares of a company. So you register your company (Limited by shares) and assign yourself shares as the only share holder. It can often be wise to create a large amount of shares as it saves paperwork when you get your first investment. For example my company has 1000 shares. The website is then an asset of the company.
the amount you have ‘invested’ at this point I would simply but into the accounts as a director loan. So it identifies that the company owes you money - or you can register your shares as being worth that exact amount of money as you are owed, clear the debt and assign your shares as paid shares. - I am not an accountant, so I am not giving financial advise. The main point is that the 118pkr has no bearing on how much you own. you own 100% of the company until someone else owns shares.
If someone invests 50K pkr then how much you originally invested has no bearing on it - that comes down to a negotiation over how much equity they will receive for that 50k. The shares are then created and assigned to the new owner. Also how much revenue each of you receives is a negotiation dependong on what the investor is looking to get out of it. It may be that they are not looking for dividends or profit they may be looking for you to increase the value of your business and then to sell it, increasing the value of their shares and giving them a large return. Much of the profit sharing comes out in the share holder agreement, which says which types of shares can claim which types of dividends from profit and when.
We had one clause in our previous business which said along the lines of, if we could pay a dividend but chose not to then those holding type B shares would claim that potential dividend back on sale of the company…
PS. it will likely be expected that you earn a wage from the site/investment. as long as the wage is reasonable then an investor is likely to be happy - everyone has to eat. Any money you receive as a wage you can spend however you wish, however any money that you receive as investment should be used for the business. You will likely be asked to give ‘promises’ over what your intentions are for the money and what it will be used for. If you are using the money in that direction then you will have few problems. If you spend it on an office chocolate fountain and a holiday then the investors are likely to hold you to account - unless of course you are making them a lot of money
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