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Founder Shares: How much equity compensation for each founder; ideas on how to split equity
This video describes the traditional "negotiation" approach as well as the "slicing pie" approach to determining how many startup founder shares (how much founder equity ownership) goes to each startup founder. Contingencies are also discussed, such as startup co-founder stock vesting and declining buy-back rights.
How to split equity between co-founders fairly is a challenging process. Perhaps the most important consideration is that every one walks away from the table believing the process was fair.
Пікірлер: 20
Love the Slicing Pie approach 👍
really some good points. I am discussing this with my cofounder partner today.
Learning, noting... Thank you for this channel!
@Startupsos
2 жыл бұрын
My pleasure!
Thanks for making this video. With regard to your concerns at 22 minutes. Slicing Pie participants wouldn't just take into account a bigger company's the salary will reflect the requirements of the startup position.
agree that founder funds should be treated as separate investment. founders should get access to the same investment opportunities as investors.
Thanks so much for the content. I feel like I found a portion of the answer I’m looking for. I really just need a clear answer though. I just got offered a position of CMO as a co-founder and I have been offered 5% of the company but I’m not quite sure what I should ask for or expect as a salary.. because it’s a start up I’m trying to figure out how exactly do I get paid actual money.. 😅I’m afraid to ask because I don’t want to seem nervous and get duped for my lack of understanding. this is my first time stepping into a position like this. I’ve only ever done Marketing and Consulting. this is a whole new world to me. I would really appreciate it if anybody had any answers as to what I should ask for as an initial salary or how I should go about acquiring a payment outside of equity because we are in the pre-seed/seed round so the company doesn’t have much money. What should I ask as far as a salary agreement and expect it to scale overtime?
@Startupsos
Жыл бұрын
Normally an offer would include both the stock and the monetary compensation, if a salary is part of the deal. But since it is a very early stage company, and they have little cash, then when they say "cofounder" they may mean someone who will, initially, work for stock-only. It's certainly a good practice for a startup to make that clear: is this initially stock-only, or is it stock + salary. It's certainly fair to ask the question: will your offer include a salary portion? If not, what is your plan for being able to fund salaries in the future? As to the question of what to ask for - part of the question is: what can the company afford given its cash position? You should certainly expect market-rate compensation at some point, but early on, most startups can't afford market-rate salaries.
Very well explained. Thank you so much for lot of clarity I got. 👏👍🙏
Very timely advice, thank you!
@Startupsos
3 жыл бұрын
You're so welcome!
Thanks for this insightful video.
Can anyone help with suggesting a video that addresses equity shares when buying and operating a franchise? Where there is a financial investing partner and another partner is investing time running the company
Thinking about setting aside 15% for employees and offering my two cofounders 10% each in stock options plus using slicing pie multiples to create a 5-10 year I.O.U. to compensate their work on top (2x hourly rate and 4x money invested).
Thank you very much for all your great efforts and wishing you all the best ameen 🌹
With the slicing pie approach, wouldn’t the vesting period have to be 1 year? If my typically consulting fee is $300/hr and I obligate myself to work for a startup for 20 hrs per month this equates to 240 hrs over the year. At a 6M valuation, this would equate to 1.2% equity. But what if the vesting period is 2 years? Wouldn’t this dilute my equity in half when in fact I am contributing 480 hrs over two years which would be 0.6% equity each year over two years. Could you help me understand this a little more?
Also the other cofounders didn’t sign their vesting agreements. Should I follow suit....And does that mean that Because no one signed the agreement does that means that we all would fully own our shares upfront.
@Startupsos
Жыл бұрын
In my experience, the vesting agreement should be part of the stock purchase agreement - so it the agreement isn't signed, then you don't own the stock! If cofounders purchased their stock without having some kind of vesting agreement built into the purchase agreement, then I don't believe the company is protecting its stock the way I would argue it should.
I was a minor at the time I was a co-founder of a company that has now grew to one of the most successful companies that in my view has literally changed the w😂ld ! I was told that some heavy weights were after the company and were going to screw me out of my % that had been agreed t on a contract we all signed with an attorney present at the time . The co. Was acquired due to a leverage buyout. I signed another contract stating that I was the one who created the name of the co. (Trademark) that is now one of the largest global brands ever. ❤ what can I do to find my stake in the company that surely may have never came to be if it weren't for my role played in the startup of the company?
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