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How does the new LLC determine the total number of issuable shares?

Should I purchase shares in my former startup?

  • I left my SaaS startup after 2 years and was provided the opportunity to purchase the shares I earned as part of my sweat equity, note actual shares not options.  They valued (how I do not know since they do not have any VC investors and are still a private company) the shares at 56 cents a share and would result in me giving them a check for around $9,000 USD. This is a lot of money and naturally I am conflicted. I would like to know opinions on: -Things to think about to determine if I should purchase -People's own experiences having left startups in similar situations -What legal documentation I should expect to receive if I do give them a check (past experiences with them make me ask this) NB, they won't tell me the number of shares outstanding (a warning sign?) and are self-funded. Any help is appreciated!

  • Answer:

    Not revealing the outstanding shares is for sure a warning sign. The audited financial statements should reveal the number of outstanding shares.  Make sure to ask for a copy of the most recent financials and make it conditional on giving them the money.

Viola Yee at Quora Visit the source

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The first question to ask yourself is whether you think they are doing well.  Next, since they have VC investors, do they ever plan to have some "exit" or liquidation event (where shares can be turned into cash).  IPO is one way (statistically unlikely), and an acquisition is another way.  Another question is, how many outstanding shares do they have, and what is an estimate of their current valuation? If you're still not sure, and you're not comfortable putting up the $9000, you could buy just a portion of the shares.  When I bought shares in the startup I was at, I got a physical stock certificate, saying I owned a certain number of shares.

Chris Lamprecht

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