How equity between founders should be divided?

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.

What is the most worrisome aspect of entrepreneurship?

Key Takeaways

• Entrepreneurs face multiple risks such as bankruptcy, financial risk, competitive risks, environmental risks, reputational risks, and political and economic risks.
• Entrepreneurs must plan wisely in terms of budgeting and show investors that they are considering risks by creating a realistic business plan.

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.

How much stock should a startup company’s founders get?

One of the first steps to incorporate a startup company is to issue equity to the founding stockholders. However, there is more to that process than just deciding how much equity each founder should receive. Here are a few additional issues to consider: Legally-speaking, there is no such thing as “founders stock.”

Should entrepreneurs make money or control their startups?

At every step in their venture’s life, entrepreneurs face a choice between making money and controlling their businesses. And each choice comes with a trade-off. Startup founders who give up more equity to attract cofounders, key executives, and investors build more valuable companies than those who part with less equity.

Do startup teams agree on their equity?

Nearly 40 percent of startup teams spend a day or less agreeing on their equity, Harvard Business Professor Noam Wasserman found, who studied high-stakes decisions at more than 6,000 startups over the course of 15 years. Of those, an overwhelming amount split their equity evenly.