Quora Answer: If I Found a Company with Investors, Will They Have Shares?

The following is my answer to a Quora question: “If I found a company and have investors, will they have stocks in my company?  What if I invest my own money?”

When you have investors, they generally take an equity stake in the company.  That makes them shareholders.  Depending on the amount of shares, and the agreement you have with them, they may also hold positions on the board.  If these investors buy bonds, they are lending you money, making them bondholders, creditors.  You could negotiate for these bonds to be convertible into an equity stake.

As the founder, you may choose to invest your money into your own company.  It would be better to ensure that you have the controlling stake in the company no matter how much the investors put in, since it is your idea.

If you are the sole funder, that makes you the sole shareholder, which is never ideal, even when you have the money.  The purpose of business is getting other people involved.  Getting funding from others validates your business idea to a wide network.  When people invest in a company, they also invest their reputation, and would be more likely to open their network to grow the business.