For incorporation of a startup (in Delaware) which seeks to acquire
about $500K from angels, how many shares should be allocated for
incorporation? (i.e what is the average recommended for a startup that
seeks to ultimately IPO).

Should the company establish a par value on these shares and if so, at
what amount?

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Clarification of Question by mhugo-ga on 16 Jul 2002 11:39 PDT

If I set the number of preliminary shares too low, and then have to
increase this amount, won't I end up significantly diluting my
position?

If I may please offer an observation. Ultimately, it will be the
"angels" that will dictate to you the structure of your capital
accounts:  how many shares that will be allocated to you, them, and
other parties (directors, officers, employees, family, etc), priority
rights, options, quasi-equity instruments that may be issued, etc.

The key at the early stage is to not tie yourself down by making
commitments that may have to be broken later at the insistance of the
"angel."

Why not get the most shares authorized that are possible with paying
the smallest franchise fee to the state of Delaware. You can always
increase the authorized shares to accomodate the needs of your
investors. This can be done quickly, painlessly, and inexpensively.

Keep it simple. It's only paper at this stage - whether you authorize
a million shares or a hundred shares, it's only paper.  Concentrate on
your wonderful idea, market the idea to the angels, have good counsel
available to you (tax and legal) to protect your interests, keep your
commitments to an absolute minimum, and concentrate on making your
product or service the best available in your particular market.

Enjoy the fruits of your labor.
weisstho-ga