I'm preparing a startup and I'm hoping to learn how others have structured their equity sharing deals so I can consider my options intelligently. I can imagine one of the founders 'slacking off' once the business starts generating substantial income and I think it would be a mistake to give a person like this too much equity in the beginning, but ...<p>How do you decide how much equity and how much salary to give other founders, and when they should receive these benefits?<p>Does it make sense to share equity (in the beginning) based on the number of hours each has contributed to the project in advance?<p>Does it make sense to base the future equity sharing on hours worked after the company is started, so that if we end up with slackers they get no more than they earn -- and so those of us who do most of the work get nearly all the equity? Or is this more of a salary issue than an equity issue?<p>I'm particularly interested in how other companies have structured their equity and salary arrangements, especially when they work well and are appreciated by everyone involved:<p>- How is your equity sharing arrangement structured?
- Who gets what percentages and why?
- How much equity is reserved for future investors, etc?
- How much equity did you receive from the start?
- How much more do you get as the business grows?
- What determines the amount of stock you own?
- Do you receive more stock for more time on the job?
- How does vesting work in your company?<p>Someone once suggested that I keep most of the equity myself and only give out a small single-digit percentage to each of the other founders. This seems too greedy to me, but he also said my equity would be the portion that gets diluted in a round of future funding so I had better keep most of it myself. I have no idea if he knows what he's talking about.<p>In fact, I have no idea how long each founder should be required to work before they are 'vested', and perhaps even the issue of vesting should be approached as an incremental benefit rather than something that happens all at once.<p>Basically I'm looking for any insights or examples you can share that might give me some reasonable ideas for structuring our equity sharing arrangement. Thanks.
It really depends how critical the team are and how much they are giving up to join you. In my case, I agreed with my co-founder (engineering leader) to just do it as up front equity rather than vesting and we agreed 20% plus a nominal salary (before dilution in funding rounds). IMO Don't be too greedy and try to retain too much yourself, your founders will be key to your success or failure.<p>And then for the others who joined after we did it as share options, up to 4%. A way to calculate is to use sweat equity.. what would they/you normally get working for a large company for that time against the valuation of the company you work out.