startup-costs, funding, financeNot sure if this question would go here or Money SE, but after reviewing the rules I think it belongs here.
I am currently facing a situation with a startup parent company to two entities; one based in the US and another based in another country. We are collecting our first round of shareholders contributions, and the shareholders are the same for both entities.
My question is regarding the currency in which to accept the contributions for each entity. Currently, in the other country, there is a large discrepancy between the official exchange rate and the black market exchange rate. Naturally, many of the shareholders from the US want to contribute in the other currency; however, I am trying to convince them to perhaps use USD as it is more stable. This is a problematic request, as we have shareholders in the other country as well, and they would almost certainly use their currency rather than the USD.
How should we decide to collect the contributions? What exchange rate should we use to prevent arbitrage and make things fair? Is there a middle ground here or should we consider an out of the box solution?
Please recommend a way to proceed to try and appease everyone.
This is not about fair. Remember that. This is about money, and you want to get the most out of their contributions.
It seems that they want to leverage the fact that the other currency is not worth as much as the US dollar. As a result, they are buying shares of your company at a discount. Do you want to sell your company at a discount? I assume no.
Make sure they pay you in US dollars (or the currency that is worth the most to you). If they complain, walk.
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