financing, angel-investorsI previously asked this question but did not get a good response maybe I did not structure the question correctly.
So I want to set up a company limited by shares, i.e. a private limited company as they are called in the Common Wealth countries. I will have some ordinary shares between my friends and I. Then as a way to fundraise for full operations we plan to create preference shares which will then be offered to the investors. Is this the way startups are doing it throughout the world when they are doing their funding rounds etc? Or is their another approach to raise money but without giving up our ordinary shares
That’s the way it is done, yes. However, keep in mind that you don’t “create” preferred shares and then offer them to angels, no. First you find an angel, then you negotiate the terms, and only then you issue the preferred class of shares based on these terms.
Better get a lawyer involved in that too, the angel will most certainly have one.
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