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I am interested in knowing how to place a value or dollar amount for shares as it relates to a startup? For instance if a company needs $500k how do they utilize their shares to raise it?
This is called the company's Valuation. Basically if you need $500K, you (and the investor with the check) need to determine what percent of the company that money buys. You would then sell that many shares in your company.
Valuation is determined by many things, though it usually comes down to a gut feeling.
Here are a few good links explaining valuation:
http://www.investorquestions.com/venture-capital-answers.asp?id=26
http://www.investorquestions.com/venture-capital-answers.asp?id=38
Example Term Sheets:
http://www.fundingpost.com/investor-presentations/term-sheets-mellon-ventures.asp?refer=iq
Book on raising your first round of Capital:
http://www.fundingpost.com/products/Item.asp?refer=IQ&item_id=486
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