Fundraising · Early Stage Funding

Different Price per Share during Seed Round?

Lucas E Wall

December 10th, 2015

I am thinking about asking for seed funding from a network of individuals, and one question came during initial conversations with an adviser.

We are thinking about opening this round for a few months, but our project keeps growing. We believe we will get our first customer soon, and it could happen while we are asking for seed money.

In such case, can we ask for more per share as part of the same round?

Are there any rules saying the price per share needs to be the same throughout the round?

What could be the reaction from investors based on your experience?

Peter Weiss President at American Outlook, Inc.

December 11th, 2015

There are a number of issues around the plan you propose.

1.  Any offering must have a maximum amount or a maximum number of shares.  This is basic disclosure for potential investors.  A well-structured offering with common investor protections also has a minimum amount to be raised before you cash the checks.

3.  Be careful about losing the exemptions under which you are doing the offering.  If you are selling to investors in more than one state you're subject to the Federal regulations (many of the exemptions are limited to $1 million per year).  If you are selling only in one state make sure you comply with your local rules.

4.  The biggest reason not to try this is most investors wont play.  You need to have made some pretty serious progress to justify a big step up in valuation in close proximity to the last investment.  I usually counsel at least six months between the close of a round and increasing the valuation because of investor resistance.  

5.  Another reason for not doing it is that it gives the impression you're more focused on financial gamesmanship than running and building the company.  As CEO you should focus on creating underlying shareholder value, not extracting marginal dollars from your last investor.  If you're about to make big strides shut down the old offering, wait at least several months and come back with a new offering based on the meaningful change in the business.  If you're doing common now and want a big increase in value, make the next round preferred (small increases in value close in time rarely succeed).  Otherwise, keep it simple, use your achievements as a way to bring in capital quickly (you can tell people you're closing the round in X days or weeks because you believe the value has increased but make sure you really do it or you'll lose credibility) and go build a great company.  

Good luck with the raise.

Neil Gordon Board Member, Corporate Finance Advisor and Strategy Consultant

December 10th, 2015

Excuse the semantics, but if you put the word "round" aside, and simply ask if over time you can change the price per share (or unit) of the same class of security, the answer becomes more obvious.

Thomas Kaled Business Development Consultant @

December 10th, 2015


I am not sure what the States are in which you are raising the money however in Texas with a private company, as long as your Investors are qualified there are no rules relative to the value of equity with the exception of par. That said, there are significant costs for legal and accounting for the Company in the event that you wish to Register your securities and for your Investors there are tax ramifications as you move toward a 'marginable' equity and certainly upon sale. Since your disclosure document defines the parameter of the "Round" as long as it provides for a sliding scale of cash for equity as a 'money raiser you should be covered as well.

I would be cautious about defining certain path events (first customer, first $1 Million in sales etc.) and simply leave it to the "cash raised" per Round targets.

Shailesh Gupta Entrepreneur Forever.

December 10th, 2015

Lucas, I think you are more concerned about what angels will think. For this, you can break your full round in 3-4 buckets and raise each round at slightly higher valuation given you can justify that company de-risked some of the value propositions between this and the last round.

Liza Taylor Communication Specialist at Keyideas Infotech

December 20th, 2015

Great question Lucas E Wall. Factually, it is very tempting to ask for more. This is natural when your product is getting a good response in the market. I would suggest you, to value your existing investors because they are the ones who have made an initial investment. Give them the same price and never think about asking for more, but you can tell them to give an extra price whenever they feel like. If you need to raise a price of your company's share, I would suggest, do raise from new investors but make sure that the prices of your shares should be constructive enough to move on with your development. 

Good Luck.