Ask HN: How do incubators set up their equity purchase?

6 pointsby ffumarola15 lat temu0 comments

I have seen two methods:

1) $20,000 for 5% equity straight up

or

2) $100 for 5% of equity, and $19,900 for stipend (or some other thing not related to the actual stock purchase)

Are there any tax implications either way? Obviously method 1 causes your valuation to increase substantially, but I do not know how that affects the company. I've seen both, so just looking for some info!

Thanks.

edit: got rid of variables and just threw random numbers in

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