When Are 350 Million Shares No Different Than 35 Million?

VC Brad Feld answers the following question:

“At my company, we’re looking at recapitalizing from 3.5 million shares to 35 million (and contemplating 350 million). The reason is pretty straightforward (although we might be way off base here): we want to create “more shares” so that as we roll out our stock option plan there is some enhanced psychological value in “getting more shares,” for employees. Although the value once you do the math is the same, I personally believe that people would rather get 5,000 shares than 5 shares, regardless of the monetary value. So, I asked my attorney what his recommendation is, but I’d love a second opinion. Do we stay at 3.5m, do we go to 35m, do we go to 350m?”

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