₹5 crore becomes 50 lakh shares

Watch the money turn into slices.

A founder (the **promoter**) starts a company. He puts in ₹4 crore. You and a friend each put in ₹50 lakh as early investors, called **angels**. The ₹5 crore goes into the **company's** bank account, not the founder's.

In return, each of you gets **shares**. You put in a tenth of the money, so you own a tenth of the shares: **10% of the company**. Your money wasn't a loan. It bought you a slice.

The words on a share

• Share capital ₹5 crore — The money owners put into the company in exchange for shares.
• Face value ₹10 — The value printed on each share when it's created. The company picks it; it could be ₹1, ₹5 or ₹10.
• Shares issued 50 lakh — All the shares handed out to owners. Share capital ÷ face value.
• Shareholding pattern 80 · 10 · 10 — The list of who owns how many shares, and what percentage that is.

**Your stake = your shares ÷ shares issued.** 5 lakh ÷ 50 lakh = 10%.

Split the company yourself

Change the face value and how much you put in.

The promoter puts in ₹4 crore and the other angel ₹50 lakh. You decide how much you put in, and the company decides the face value.

**Remember:** face value changes **how many** shares there are, not **how much** of the company you own.

More shares isn't always a bigger slice

Switch between the two companies.

Asha owns 10,000 shares of one company. Ravi owns 50,000 shares of another. Who owns more of their company?

What your slice is worth

Drag the company's value.

What a company is worth is called its **valuation**. Your slice is always your percentage of it.

Example values. A company's value can also fall, and so can your slice's.

Check — Question 3 of 4

Put each one where it belongs.

What you now know

• Owners put money into the company and get shares in return. It's ownership, not a loan.
• Shares issued = share capital ÷ face value.
• Your stake = your shares ÷ shares issued.
• Face value changes how many shares there are, not how much you own.
• The shareholding pattern lists who owns what.
• Your slice is worth your stake × the company's value.