How do you split shares between founders?

How do you divide shares between founders?

Summary

  1. Rule 1) Try to split as equaly and fairly as possible.
  2. Rule 2) Don’t take on more than 2 co-founders.
  3. Rule 3) Your co-founders should complement your competencies, not copy them.
  4. Rule 4) Use vesting. …
  5. Rule 5) Keep 10% of the company for the most important employees.

How do you divide equity among startup founders?

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  1. Founders often ask how they should split equity with their co-founders. Founders often ask how they should split equity with their co-founders. …
  2. Founders tend to make the mistake of splitting equity based on early work. …
  3. Equity should be split equally because all the work is ahead of you.

How much equity should you give a co founder?

Investors claim 20-30% of startup shares, while founders should have over 60% in total. You may also leave some available pool (5%), but don’t forget to allocate 10% to employees. Based on the most outstanding skills of co-founders, define your roles clearly within the company and assign job titles.

Do all co-founders split equity?

While splitting things equally might sound fair, that’s only the case if all founders are contributing the same amount — not just in funding, but in time, ideas, intellectual property, business relationships, and more. If not, you need a system that will split equity fairly according to what each founder contributes.

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Do co-founders get paid?

The question of how much startup founders should pay themselves has long been up for debate. Here’s what the average founder earns. … “If they go on to receive angel investment [they] can pay themselves about $50,000 per year. With venture capital funding, this tends to increase to about US$100,000 per year.”

How many founders should a startup have?

The optimal number is two founders, possibly three, but not more than three. Three is really getting to a crowd. Although there is argument to be made that having three equal founders allows for a tie breaker. A third founder runs the risk of gravitating towards a more influential founder.

Is 1 equity in a startup good?

1% may make sense for an employee joining after a Series A financing, but do not make the mistake of thinking that an early-stage employee is the same as a post-Series A employee. … Since your risk is higher than a post-Series A employee, your equity percentage should be higher as well.

How many shares should a founder have?

Initial Equity Allocation. At formation, a typical allocation of 10,000,000 authorized shares is: Founders: Approximately 8,000,000 shares distributed among the founders according to their agreed upon ownership.

How much equity should I give?

There are, however, a number of words of wisdom to take on board and pitfalls for a business to avoid when taking their first big step. A lot of advisors would argue that for those starting out, the general guiding principle is that you should think about giving away somewhere between 10-20% of equity.

How much equity do startup employees get?

At a typical venture-backed startup, the employee equity pool tends to fall somewhere between 10-20% of the total shares outstanding. That means you and all your current and future colleagues will receive equity out of this pool.

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How do you allocate Founders equity?

Dividing equity within a startup company can be broken down into five simple steps:

  1. Divide equity within the organization.
  2. Divide equity among company founders.
  3. Allocate money to investors.
  4. Divide the option pool into three groups: board of directors, advisors, and employees.
  5. Create a vesting schedule.
Capital