BLOG/Do you want to be a treasurer or an entrepreneur?/

Do you want to be a treasurer or an entrepreneur?

As a (French) lawyer I heard a million times the same question: how much capital should I put into my company?

and … because I’m a lawyer, I don’t know *your* answer but here are some thoughts I can share with you.

Once upon a time… the amount of your share capital was there to reassure creditors, mainly bankers, regarding the company’s treasury.

Why? First, because unfortunately, in France, we have a high rate of highly pessimistic citizens coupled with a strong toxic vision of business… it’s either a dream or a failure… but always a risk!

Thus, as always, we wrote a law to *protect* bankers, creditors (...). So first, if you fail (the law rarely regulates positive endings :-) creditors think they can get their money back … (who’s the dreamer?) and second, when finishing the yearly accounting records, the company always needs to have in its treasury at least 50% of its share capital.

As a result, practically everybody loses… creditors end up with nothing because the state & government social bodies are served first on the available money (forget about the first in first out rule). And second, you lose because the investments in new projects are oftentimes restricted — rather than investing, the law forces you to hoard your money.

So what’s the solution ? People like Xavier Niel and Oussama Ammar will tell you that at launch you don’t need to put in more than €1 — the rest should be injected as advanced money from the partners. And then, when success pokes its head through the door, there will always be time to increase the capital.

Your call: do you want to be a treasurer or an entrepreneur?