Capital Increase vs. Share Sale

For startups, securing funding and enabling shareholder liquidity are critical milestones. This tool clarifies two common pathways: "Capital Increase" and "Share Sale." Through direct comparison and interactive simulation, we'll help you understand the essential differences in their nature, process, and impact.

Core Definitions & Impact Comparison

Click the buttons below to focus on the key differences for each scenario.

🚀 Capital Increase

  • 🎯
    Core Definition: The company issues "new" shares to raise capital from new or existing shareholders.
  • 💰
    Flow of Funds: Money goes directly into the "company's" bank account, becoming working capital.
  • 📊
    Equity Impact: The total number of company shares increases, causing the ownership percentage of existing shareholders to be "diluted".
  • 🧭
    Primary Goal: To secure funds for company operations, R&D, and expansion to fuel growth.
  • ⚖️
    Legal Basis: Governed by corporate law, typically requiring board and shareholder approval, followed by official registration of the change.
  • 🧾
    Tax Implications: For the company, the funds are capital and not taxed as income. For shareholders, future gains from selling shares are subject to capital gains tax.

🤝 Share Sale (Secondary Sale)

  • 🎯
    Core Definition: An "existing shareholder" (e.g., a founder) sells their personal shares to another investor.
  • 💸
    Flow of Funds: Money goes from the buyer to the "selling shareholder's" personal account. The company receives no money.
  • 🔄
    Equity Impact: The total number of company shares remains the same. It's a transfer of ownership, so other shareholders are not diluted.
  • 🏁
    Primary Goal: To provide liquidity for founders or early investors, or to change the shareholder structure.
  • ✍️
    Legal Basis: A private contract between shareholders. The process is simpler but must still adhere to any transfer restrictions in the company's bylaws.
  • 🧾
    Tax Implications: The selling shareholder is responsible for reporting and paying any applicable capital gains tax on their profit from the sale.

Scenario Simulator: Equity Structure Changes

Enter hypothetical company data and choose a scenario to see how the equity structure changes. This will help you visualize the difference between "dilution" and "transfer."

1. Set Initial Equity Structure

2. Choose Simulation Scenario

Simulation Results

Key Takeaways & Considerations

Simply put, how do you choose?

When to Choose a Capital Increase

Choose this when the goal is to "fuel the company itself." You need capital to develop new products, expand markets, hire talent, or strengthen operations. It's a "collective investment" in the company's future, where all shareholders (in theory) benefit from its increased value.

When to Choose a Share Sale

Choose this when the goal is "personal liquidity for a shareholder." A founder or early investor may want to cash out part of their investment, or you may want to bring in a strategic new shareholder to replace an existing one. This is a "personal finance" decision that doesn't bring new cash into the company.

The Most Important Distinction

Remember the core question: "Whose pocket does the money go into?"
If it goes into the company's pocket, it's a Capital Increase. If it goes into a shareholder's pocket, it's a Share Sale.