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I don't quite understand your spreadsheet. Founder shares are usually purchased well before the investment, but here you're calculating them as a function of th

I don't quite understand your spreadsheet. Founder shares are usually purchased well before the investment, but here you're calculating them as a function of the total number of shares. Because the number of founder shares is already established, price per share absolutely matters. EDIT: That is, price per share isn't an independent variable (it can be calculated as a function of the other variables) -- but it can't be arbitrarily set.

harryh 13y ago
There are two scenarios: 1) The founders haven't been working especially long on the company and haven't incorporated (maybe they have an LLC, but not a C Corp). In this case it actually is pretty common for the # of founder shares to be set at the time of investment. Founders pay far less (really just a token amount like $.01) than investors. In this case the price per share is independent (and kind of meaningless. Do you want 3.5M shares worth $1 each, or 35M shares worth $.10 each. Though there are psychological norms people tend to stick to). 2) The founders have been working on the company for a while and incorporated well before taking investment. This is the scenario you describe. I added a 2nd sheet ("scenario 2") to cover this case. As you can see it also contains no circular references. As you said price per share is no longer arbitrary here as it's fixed by the # of founder shares created pre-funding. Sometimes you might do a split (or reverse split) here to adjust the price per share to the same psychological norms as above.