When a company incorporates at Companies House, the founders technically subscribe to shares in the company, just like in a funding round.

Most of the time, founders set the value of the share at £1 (here being both the nominal value and the price in the round), and create 100 shares split between themselves. They company has technically raised £100.

Now this normally causes problems, because you can't have fractional shares, and it becomes difficult when raising larger amounts as the price per share becomes really, really high. So most company's do a 1000-1 or 10000-1 share split. More on that here.

This changes the nominal value of the shares. The maths must always work out to get us back to that £100 initially invested

So if we did a 1000-1 share split, the new nominal value is £0.001, instead of the £1 when the company incorporated.

So a founder who got 50 shares at a £1 nominal value, now has 50,000 at a £0.001 nominal value.

When you do a new funding round, you don't transfer shares, you create new ones. So let's say now we're creating 20,000 new shares for our investors, they will all have a £0.001 nominal value. It has nothing to do with the share price in the actual funding round itself, it's just a number that is tied back to inputs made when the company was incorporated.

The price per share in the funding round is set by the company valuation, and is always much higher than the nominal value. It's worked out by taking the company valuation and dividing the current number of shares in issue.

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