Co-founder Equity Split: A New Framework to Objectively Divide Startup Ownership and Get Back to Building a Business

Gust

We’ve just released our free Co-founder Equity Split tool. It’ll give you a fair and objective recommendation about how to divide your startup’s ownership, so you and your co-founders will have a sensible, real starting point for this notoriously hard, crucially important conversation. Many startup founders find themselves lacking clarity and direction when it comes time to divide their.

Techstars Equity Back Guarantee

Feld Thoughts

Today Techstars announced an “ equity back guarantee ” for any company that goes through the Techstars program starting in 2015. We periodically encounter founders during the selection process who question the value of Techstars. Techstars equity back guarantee

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Trending Sources

How to Divide Founder Equity: 4 Criteria to Discuss

View from Seed

Editor’s note: Understanding how to divide founder equity at a startup can be tricky, even to the point of reaching emotional riffs between founders. Below, Lee Hower offers advice for approaching these equity discussions objectively and properly.

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Issues with Equity Misalignment

Ask The VC

Q: In our startup we have 4 founders, two of whom are not full time. The two founders with the least equity happen to be the two tech founders. Some of us feel that we made a mistake when allocating shares in the beginning – there is one founder in particular who does not do any work, and he has the second-most equity (the split goes like this: 32%, 26%, 10%, 7.5% In your case, you feel like the 32% founder doesn’t do any work.

How does equity dilution work for startups?

Gust

Equity dilution works when the same pie is divided among more people. The Founder of a company starts by owning all the shares representing ownership of the company. Uncategorized company equity dilution founder investors startup

Founder's Dilemmas: Equity Splits

www.startuplessonslearned.com

Founders Dilemmas: Equity Splits. The following is an excerpt from HBS Professor Noam Wasserman’s new book, The Founders Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup. How should founders deal with such developments? Lessons Learned.

Punch & Pie: How Should Co-Founders Divide Equity?

Agile VC

I like to say that “there are only co-founders” — it’s extraordinarily rare for a successful business to have just a sole founder. But not all co-founders are equal in terms of title, ownership, responsibilities, and so forth.

Startup CTO Salary and Equity Data

SoCal CTO

Todd Gitlin of Safire Partners was nice enough to compile some data on Start CTO Salary and Equity at Venture Backed Companies for the LA CTO Forum and present last year. Todd is a go to resource for people looking for talent in startups.

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CTO Salary and Equity Trends 2009-2011

SoCal CTO

Todd Gitlin of Safire Partners - a go to resource here in LA for recruiting C-level positions at startups - was nice enough to compile some data again this year (see last year's Startup CTO Salary and Equity Data ).

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Should You Offer Equity Compensation to Employees?

Up and Running

Of course, not every equity compensation story is a David Choe Story. If you’re thinking about extending equity to an employee or a vendor (as in the example above), you should know that the topic is multi-faceted. In this article, I’m going to examine: What equity compensation is.

How to Divide Equity to Startup Founders, Advisors, and Employees

thinkspace.com

How to Divide Equity to Startup Founders, Advisors, and Employees. The part that I’d like to zero in on is when you’ve got a high growth company what are some of the best practices out there to distribute equity to the founders, advisors, and employees?

An Advisor Equity and Advisor Pool Breakdown

Eric Friedman

Bigger/better advisors who get more equity have things like; excellent domain expertise to help you avoid pitfalls, deep connections within the industry to help with the intros, partnerships, and more. As a potential advisor looking to get involved with the company; MORE EQUITY!

What Founders Need to Know About Startup Equity

Early Growth Financial Services

Equity is a startup’s lifeblood. One thing to remember: your equity is precious: don’t be lavish in giving it away. There’s no single best … Continue reading → Equity / Debt / Venture Funding And, just as with any other element of building a successful business — putting the right team in place, setting and hitting milestones, and effectively managing cash — developing your capital strategy is an important a piece to get right.

Finance Fridays: Getting Started – Allocating Equity and Founder’s Investment

Feld Thoughts

Finance Friday’s gets off the ground with today’s post by introducing you to an imaginary startup, the entrepreneurs that we’ll being following throughout the series, and their first challenges: splitting up the foundersequity and addressing the case where one of the founders provides the initial seed capital for the business. Jane and Dick each brings a similar level of skill and capability to the business, making it easy for them to agree to a 50/50 equity split.

What is an effective “pre-incorporation-agreement” between possible founders of a startup?

Gust

The bottom line is that the very question you are asking is one of the trickiest things of all when it comes to startup founding. Then sit down with your co-founders and divvy up the equity based on the contributions you all believe each of you will make…providing for reverse vesting, a large option pool, and a clear decision-making structure. Pivotal Moments equity Founder equity founder relationships founders incorporation agreement startups

Mathematical vs. Economic Dilution of Startup Equity: Thinner Slices of an Extra-Large Pizza

Gust

Let’s get right down to business: Dilution of founders’ and other early shareholders’ equity in startups is frequently a subject of intense interest and debate. The simplest illustration is the first VC funding round of a new startup.

Equity basics: vesting, cliffs, acceleration, and exits

The Startup Toolkit

false As a cheatsheet, the “normal” equity structure is: Founder terms: 4 year vesting, 1 year cliff, for everyone, including you. Getting equity structures right. When it comes to equity terms, there are only 3 things to understand: vesting, cliffs, and acceleration.

CTO Equity and Compensation at Venture Backed Companies

SoCal CTO

Todd Gitlin of Safire Partners was nice enough to compile some data on CTO Equity and Compensation at Venture Backed Companies for the LA CTO Forum and present last year. Todd is a go to resource for people looking for talent in startups.

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Visualization of Startup CTO Equity and Salary Data

SoCal CTO

A long-time friend and colleague, Steve Wexler, who is great at visualization took my Startup CTO Salary and Equity Data and produced a really need interactive visualization via Tableau. Most non-founders have less than 2%. Most Founders have greater than 5%.

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Equity Crowdfunding: Is it Right for Your Business?

Early Growth Financial Services

Though still not fully phased in, the Jumpstart Our Business Startups Act (JOBS Act) which Congress passed in January 2012, kicked off a wave of business and investor interest in (and platforms to facilitate) equity crowdfunding.

Can A Hoodie Increase Brand Equity?

crowdSPRING Blog

From a brand equity perspective, the purple hoodie was a unique way to acquire 2,000 die-hard brand advocates. Startups have been using branded apparel as a way to build brand equity for years. Image credit: Twitch.

Startup compensation: flat salaries and equity/options work best

The Equity Kicker

We had some success with this system, most notably at Zeus Technology, which was a good exit for my old firm Draper Esprit, but these days I recommend flat salaries with upside coming from options or founder shares. Here’s why: Quarterly goal setting is still best practice (now called OKRs ) but linking them to compensation creates a misalignment of objectives – the startup wants big goals, the employee wants achievable goals so he can get his bonus.

How Much Founder Stock Should You Offer Co-Founders?

Startup Professionals Musings

Two heads are better than one, so the first task in many startups is finding a co-founder or two. The first question I usually get is what percent of the company or equity is that person worth? Giving a co-founder a salary won’t get you the “fire in the belly” you want.

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Free Startup Docs: How Much Equity Should Advisors Get?

techcrunch.com

Startups. Startup Battlefield. startups. Free Startup Docs: How Much Equity Should Advisors Get? He covers startups, music, social, mobile, health, and education. This is where a lot of founders get stuck. FOUNDER INSTITUTE. Mobile. Gadgets.

Startup Founders Can Learn From Reality Television

Startup Professionals Musings

Here are eight key points that I believe should be taken from the show by every startup founder looking for investors in real life, across the range of venture capitalists, angel investors, or even friends and family: You will be judged first as a person, then by your idea.

What Founders Need to Know About Equity Grants

Early Growth Financial Services

In a startup’s early days, nothing matters more than attracting and retaining talent. Equity plays a key role in aligning incentives, clarifying expectations, and deliverables between companies and employees. 3 most common ways to make equity grants: 1.

Visualization of Startup CTO Equity and Salary Data

SoCal CTO

A long-time friend and colleague, Steve Wexler, who is great at visualization took my Startup CTO Salary and Equity Data and produced a really need interactive visualization via Tableau. Most non-founders have less than 2%. Most Founders have greater than 5%.

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Founders Circle

A VC : Venture Capital and Technology

Last week my friend Chris Albinson formed an interesting new firm called Founders Circle Capital. In a nutshell, Founders Circle provides liquidity for the founders and employees of a “breakaway growth companies” so they don’t need to sell or take the company public prematurely. It takes time for the equity value to get to a point where it makes sense for the founders and employees to take a bit of their equity value off the table.

Equity-Only CTO and Equity-Only Developers

SoCal CTO

I had a recent email dialog with the founder of a company looking for a CTO for their startup. And I tried to evaluate the idea and figure out: What did the founder really need here? Was it a Startup Founder Developer Gap ? Did they really need a Startup CTO or Developer or both? And do I fit as a Part-Time CTO , Technology Advisor , CTO Founder , Acting CTO ? And he was still in the process of raising additional capital, so it was equity only.

The Perils of Founder Fighting

Both Sides of the Table

Yesterday I wrote a post about “ the politics of startups ” in which I asserted that all companies have politics, which in its purest sense is just about understanding human psychology. One founder has more risk tolerance and the other wants to be conservative.

Startup Equity For Employees

www.payne.org

Startup Equity For Employees. 6 Founders / Restricted Stock. 7 Salary vs Equity. The re-heating of the venture funded tech market has pushed a heat up of the hiring market, and Im getting more calls from friends asking for help understanding startup stock (equity) offers. UPDATE: If youre a founder or near-founder, your equity terms are likely defined by the funding terms negotiated with the investors. Founders / Restricted Stock.

Financing your business: Debt vs Equity

StartupCFO

VentureBeat wrote a post recently on debt versus equity which one is right for your business. So what I would like to do here is layout a more comprehensive framework for the pros and cons of debt versus equity and when you could look at each for financing your business. Equity.

Texas Proposes Equity-based Crowdfunding Rules

SiliconHills

By LAURA LOREK Founder of Silicon Hills News In Austin, one of the big issues facing startups, particularly in the technology industry, is lack of access to capital. Last year, Austin companies received $626 million in venture capital, or 49 percent of the venture capital dollars for Texas, said Michele Skelding, senior vice president of […] The post Texas Proposes Equity-based Crowdfunding Rules appeared first on SiliconHills.

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Rethinking Founder Vesting

K9 Ventures

One of these norms is how founder vesting and employee vesting works. Here is a good summary post from Cooley GO on Founder Vesting. There are two main reasons for founder vesting: To ensure founders stick around and build the company. To protect the founders (and investors) when a member of the founding team separates from the company prematurely. IMHO the former — having a cliff, is better for founders than the latter — not having a cliff).

10 Partner Qualities to Test Before Sharing Equity

Startup Professionals Musings

A while back I talked about how and where to find a co-founder in “ For a Startup, Two Heads are Always Better Than One.” The feedback was good, but some readers asked me to be a bit more specific on attributes that might indicate an ideal startup partner.

5 Mistakes Every Startup Founder SHOULD Make

OnStartups

Much digital ink has been spilled trying to caution startup entrepreneurs against making mistakes. So here''s an initial list of mistakes that you SHOULD make as a startup founder. The objective of the startup game is to win, and two losses don''t equal a win.

How to Find Startup Co-Founders Online and in the Real World

VC Cafe

Whether you have an idea for a tech startup, or you want to join someone who does, life is too short to work on something you are not passionate about. So how do you go about finding co-founders and early members of your startup? link] - a free job board for startups.

4 Things Every Founder Should Know About Convertible Equity

Early Growth Financial Services

Lately I‘ve been getting more and more questions about convertible equity: “What is it?” In short, convertible equity is a form of financing that gives investors the right to preferred stock once a triggering event occurs. First some background… Convertible debt Convertible debt is a common feature of startup seed rounds, used in more than ? and “Should I use it?” So I figured now’s the right time to answer a few questions and fill in some blanks.

Equity Compensation at a Startup is a Big Gamble

Startup Professionals Musings

Wouldn’t you like to be one of the lucky people who joined Google and Microsoft when these were startups, and now be a multi-millionaire? So people ask me “How many shares should I ask for when I join a startup today?” compensation entrepreneur startup employees equity business

Why offering employee equity is crucial for your startup

The Next Web

Dealing almost exclusively with first time startup founders, we tackle the following question with nearly all of our CEOs: How much equity should they give to the employees? The post Why offering employee equity is crucial for your startup appeared first on The Next Web.