Ask HN: Have YC alumns seen adverse effects from pricing common stock early?

2 points by lzell 14 years ago | 1 comment

It is my understanding that it can be advantageous for both the investor and entrepreneur to use preferred stock in early financing deals. From the entrepreneur's perspective the common stock value will remain low.

Has anyone seen effects in practice, perhaps surrounding recruitment, of pricing common stock early for a YC (or other) deal?

Part two: Right now our company has 10M common shares, with a par value of .00001. Is there a "trick" that incubators use to keep the common stock value low when dealing with such small investment amounts?

Edit: formatting.

MikeTaus 14 years ago |

Yes to the first question... this is pretty common. But do yourself a favor and hire a decent attorney to help you. Financing missteps can kill your company and/or make future financing much more challenging.