It is my understanding that it can be advantageous for both the investor <i>and</i> entrepreneur to use preferred stock in early financing deals. From the entrepreneur's perspective the common stock value will remain low.<p>Has anyone seen effects in practice, perhaps surrounding recruitment, of pricing common stock early for a YC (or other) deal?<p>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?<p>Edit: formatting.
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.