Starting a new company is exciting, but it also comes with a long list of decisions that shape the future of the business. One of the most important—yet often confusing—decisions is how to set the price per share for founders. It’s a step many entrepreneurs overlook, rush through, or simply copy from others without understanding its impact.
This matters now more than ever. More African founders and young teams are launching digital products, attracting early users, and preparing for investment. As the startup ecosystem expands, getting your equity structure right from the beginning can determine how strong your foundation will be a year, two years, or five years from now. A well-thought-out share pricing strategy protects your ownership, builds trust with potential investors, and avoids painful mistakes that could limit your company’s growth later.
At Charisol, we’ve supported startups across the UK, US, Canada, and Nigeria to build, position, and launch their digital products. And over the years, we’ve seen the same questions come up repeatedly—especially from founders trying to understand how equity actually works. Setting the price per share becomes easier once you understand what influences it, why it matters, and how to approach it with confidence.
Let’s break it down clearly and practically.
What Does “Price Per Share for Founders” Even Mean?
When you register a company, you usually create a number of shares—say 1,000,000. These shares represent ownership. The price per share simply tells you the monetary value of each share based on your company’s valuation at the time.
If the company is valued at $10,000 and you created 1,000,000 shares, then each share is worth $0.01.
Founders typically buy their shares at a very low nominal price because the company is brand new and has little or no revenue. But even though the price is low, it establishes your legal ownership from day one. It also sets the tone for how future investors will buy in.
Why Getting This Right Matters
There are a few key reasons why founders need to approach share pricing carefully:
1. It Defines Early Ownership
Your initial share structure determines how much equity each founder holds. If this is not done properly, it can lead to disputes, imbalances, or dilution issues later.
2. It Affects Fundraising
Investors look at your share price and valuation history. If things look chaotic or inconsistent, it can raise red flags.
3. It Helps Avoid Tax Problems
In many countries, founders must purchase shares at fair market value. Pricing too high or too low without justification can trigger tax issues.
4. It Sets the Stage for Employee Equity
If you plan to create an employee stock option pool, your initial pricing affects how affordable those shares will be.
5. It Builds Investor Trust
Clear, logical share pricing shows that you understand your business structure—something investors value greatly.
How to Set the Price Per Share for Founders Step-by-Step
Here’s a simple, practical breakdown of how founders typically determine their share price.
Step 1: Determine Your Startup’s Initial Valuation
At the very early stage, this valuation is usually nominal. You’re basing it on the company’s current assets, intellectual property, or the cost of setting up. Many early startups choose valuations between $1,000 and $20,000 depending on their jurisdiction and legal advisor.
How do founders justify this?
- The company is new.
- There is no revenue yet.
- The product is still under development.
- The value is mostly in the idea and early work.
This keeps things simple and aligned with tax rules in most regions.
Step 2: Decide How Many Shares to Create
Most startups create a large number of shares upfront—commonly between 1,000,000 and 10,000,000. This doesn’t mean you’re instantly worth millions. It just makes future fundraising easier, because issuing new shares becomes more flexible.
Let’s assume:
- You create 1,000,000 shares.
Step 3: Calculate the Price Per Share
Use this formula:
Price per share = Company valuation ÷ Total number of shares
Example:
- Valuation: $10,000
- Shares created: 1,000,000
- Price per share: $0.01
This is the typical range for early-stage founders.
Step 4: Allocate Shares to Founders
Once the price is set, divide shares based on contribution, roles, risk, and long-term involvement. There is no universal rule, but fairness and transparency are essential.
Common patterns include:
- Two co-founders: 50/50 or 60/40
- Three co-founders: 40/30/30 or 33/33/33
It all depends on your internal agreements.
Step 5: Document Everything Legally
You’ll need:
- A founders’ agreement
- Shareholder agreements
- Vesting schedules (recommended)
- Legal filings depending on your country
This protects your company as it grows.
Step 6: Review Before Fundraising
As your company begins gaining users, revenue, or traction, your valuation will change. Before raising capital, revisit your share price with an updated valuation, often guided by a financial advisor.
What Most Founders Get Wrong
After working with countless founders, we’ve noticed a few common challenges:
Setting the value too high
Some founders want to look “big” on paper. But an inflated valuation early on can scare investors away or put pressure on future rounds.
Using a random number of shares
Choosing numbers without strategy can create complications when issuing new shares to employees or investors.
Skipping proper legal documentation
This often leads to disputes later, especially when the business becomes profitable.
Not thinking about future dilution
You don’t want to find out too late that you’ve given away too much equity early on.
How Charisol Helps Founders Avoid These Mistakes
Charisol, founded by Dolapo Olisa—a Mechanical Engineer turned DevOps Engineer and UX Designer—has always been focused on bridging the gap between skilled African tech talent and the small businesses and startups that need them.
Over the years, we’ve supported founders not just with building digital products but also with the strategic decisions required to bring those products to market.
Many founders come to us unsure about:
- How to structure their company
- How to prepare for investors
- How product development aligns with their long-term valuation
Because our team works closely with early-stage companies, we help them think through their product roadmap in ways that make fundraising and growth smoother.
You can learn more about our approach and story here: charisol.io/about/
And if you’re at the stage where you’re planning a digital product, thinking about investors, or need a clear development strategy, Charisol can support you: /charisol.io
Or you can get started immediately: charisol.io/get-started/
Frequently Asked Questions
1. Should founders always pay for their shares?
In many jurisdictions, yes. Even if the amount is small, founders should purchase their shares to avoid tax complications and establish ownership legally.
2. Can founders set any valuation they want?
Technically, yes. But it must be reasonable. Excessive valuations can trigger tax issues or undermine future investor confidence.
3. How many shares should a founder have?
There’s no fixed rule. Most founders collectively own 70–90% at incorporation, before creating an employee option pool or seeking investors.
4. How does dilution work?
Dilution happens when new shares are issued to investors or employees, reducing the percentage ownership of existing shareholders. It’s normal and expected as long as it’s planned properly.
5. Should vesting be applied to founders?
Yes. Vesting protects the company if a founder leaves early. A standard vesting schedule is 4 years with a 1-year cliff.
Final Thoughts
Setting the price per share for founders isn’t as complicated as it seems. It’s simply about choosing a reasonable valuation, dividing shares smartly, and planning for the future.
When you handle this step thoughtfully, you build a stronger foundation for fundraising, product development, and long-term growth.
As you think about your company’s future, here’s a question worth asking:
Is your equity structure strong enough to support the business you want to build?
If you’d like help building the digital product that brings that vision to life, Charisol is ready to partner with you.