Equity is divided between the founders and the business begun.  First you must create a stock option plan using your attorney, which must be registered in many states as a security offering. An option plan should carve out an addition of about 15% of the “fully diluted” shares.  There are some rules.  Ignition! MORE >>

Changing Equity Structures for Early Startup Employees Tweet Recently someone asked me for advice on how much equity they should give to their early employees. Those first employees will take 0.5-1% but they’re not going to be overwhelmed by it, or insanely incentivized by that equity alone. 0.5-1% is just not a lot. MORE >>

The Equity Equation. As this nuclear winter of venture hacks continues, I thought you might enjoy our thoughts on Paul Graham’s The Equity Equation. ” Read the rest of The Equity Equation first; it is great. You have to pay market rates regardless of the equity equation. The Option Pool Shuffle. MORE >>

You could make the same argument about acquisitions and option pools. The remaining $36 million is divided according to equity ownership. Now consider what would happen if the same company raises another $10 million, expands the employee option pool to hire more executives and to support 300 people. million. MORE >>

Too Many Founders A typical Series A sees the following equity ownership distribution: VC syndicate 50%, option pool 20%, founders 30%. The VCs will rarely take less than 40-50% of a Series A and the pool is almost always 20%. Venture capitalists are very much tabla rasa investors. 2, or 19.2% of the company. MORE >>