Legal Definitions - paid-in fund

A paid-in fund refers to a sum of money that has been directly contributed or invested into an organization or entity by its owners, shareholders, or members, rather than being generated through its own operations or profits. It represents capital that has been "paid in" from external sources to establish or support the entity's financial foundation.

• Example 1: Startup Capital for a Corporation

  When "Quantum Innovations Inc." is founded, it issues 500,000 shares to its initial investors at $5 per share. The total amount of $2,500,000 received from these investors is considered a paid-in fund. This money forms the company's initial capital, enabling it to purchase equipment, hire staff, and begin developing its products. It is distinct from any revenue the company might earn later from sales.

• Example 2: Initial Contributions to a Non-Profit Organization

  A group of environmental activists decides to form a new non-profit called "Green Earth Alliance." To cover the initial legal fees, website development, and office supplies, each of the ten founding members contributes $1,000. The collective $10,000 gathered from these members constitutes a paid-in fund. This capital allows the organization to establish itself before it begins seeking public donations or grants.

• Example 3: Investor Capital for a Private Equity Fund

  A private equity firm launches "Horizon Ventures IV," a new fund designed to invest in emerging technology companies. Various institutional investors, such as pension funds and university endowments, commit a total of $750 million to this fund. As these commitments are drawn down and transferred to Horizon Ventures IV, they form the paid-in fund. This capital is the money that the fund managers will then deploy to acquire stakes in target companies.