Paid-In Capital

What Does Paid-In Capital Mean?

Paid-in capital refers to the cash or other assets contributed by investors to a company or stock issuer in exchange for shares.

It is also called contributed capital or permanent capital. Founders raising their first round of capital from outside investors are usually at the same stage where they start comparing options for business insurance for startups.

Insuranceopedia Explains Paid-In Capital

Paid-in capital represents the value of stocks sold directly to investors by the issuer, excluding stocks traded on the secondary market and revenue generated from company operations, such as product sales at a specific branch.

The issuer may repurchase these stocks from investors, but is required to notify the state about the stocks sold and issued. Companies that record paid-in capital are almost always set up as LLCs or corporations, which is also when owners typically look at coverage like LLC business insurance.