How do you distribute equity among founders?
Summary
- Rule 1) Try to split as equaly and fairly as possible.
- Rule 2) Don’t take on more than 2 co-founders.
- Rule 3) Your co-founders should complement your competencies, not copy them.
- Rule 4) Use vesting.
- Rule 5) Keep 10\% of the company for the most important employees.
How much should founders own after Series A?
The bottom line is that instead of owning 75\% of the company, the founders will end up owning 60\% of the company, and the investors 25\%. For the founders, the $1.3 million financing was not 25\% dilutive but 40\% dilutive….Option pool.
| Series A | |
|---|---|
| Founders | 60\% |
| Series A investors | 25\% |
| Employee option pool | 15\% |
| Total | 100\% |
How do my co-founders and I pay for our shares?
Typical Steps In general, the most common practice is: The founder gives a check dated the date of the stock purchase agreement to an officer of the company on the same day. The officer keeps a photocopy of the check in the company’s files as evidence of payment. The company deposits the check in its bank account.
How do founders get equity in a company?
For any company with multiple founders, each founder should enter into a vesting agreement with the company. The vesting agreement will require the founder to work for the company for a defined period of time in order to fully “earn” their founder equity.
What should a co-founder’s future roles be?
Future Roles: Consider each co-founder’s expected role in the company based on her level of skill, capability, and the company’s needs. For example, if the company requires significant technology innovation and one founder is a world-class VP of engineering, she may deserve more equity.
Is it right to split equity between co-founders?
Every situation is different, and there’s no right answer for splitting founder equity. But when it’s all said and done, each co-founder should feel good about the equity divide. If the agreed-upon split causes you angst, it’s probably not right.
Can a co-founder get shares of a company?
Capital Contributions: One co-founder may be in a position to make a significant capital contribution to the company, and you might think she could just get additional founder shares in return.