My bad. Should have known it was at least twice as much in equity since the proposal was that the founders would keep a majority of the shares.
$3 million input is less than half the value. Ergo, a minimum of $6 million + valuation (without considering an option pool) means that 4% equity has a face value of at least $240,000.
Also, I am not certain that an S-corp allows for an 83(b) election in regards to stock options (talk to an accountant) and make shareholders (e.g. founders) responsible for tax upon the increase in the value of their stock. It could result in a huge personal tax bill for the tax year in which funding occurred. Again, talk to an accountant.
You've brought up several interesting points I'll have to look more deeply into. It does seem like a good idea to discuss this with an accountant as well. Thanks a bunch for taking the time to consider this!
My bad. Should have known it was at least twice as much in equity since the proposal was that the founders would keep a majority of the shares.
$3 million input is less than half the value. Ergo, a minimum of $6 million + valuation (without considering an option pool) means that 4% equity has a face value of at least $240,000.
Also, I am not certain that an S-corp allows for an 83(b) election in regards to stock options (talk to an accountant) and make shareholders (e.g. founders) responsible for tax upon the increase in the value of their stock. It could result in a huge personal tax bill for the tax year in which funding occurred. Again, talk to an accountant.