You’ve worked from inception to birth and now your company is evolving. You might be bringing on co-founders, senior level team members and employees. You want everyone to be aligned to and share in the success of the business, but how do you determine how much equity to give everyone? One of the most difficult decisions you will have to take as a founder is how to distribute equity among your co-founder(s) and earliest employees. Equity negotiations can be a cause of disagreements and stress and yet, are absolutely necessary.

When employees leave, always ask for an exit interview if they are open to it. You would be surprised what departing employees will communicate when they are leaving.

“Whatever kind of math you apply to split founder equity, at the end of the day all parties affected should be happy about the distribution.”

There is really no one-size-fits-all solution but we provide you with the following:

• Compensation Options. What compensation methods are available for new co-founders and first employees?
• Factors That Determine Levels of Equity. Factors to help determine how much equity founders get.
• Setting Equity Levels. Fixing employee equity levels.
• Formulas for Distributing Shares. Suggestions for distributing equity shares.

Whatever kind of math you apply to split founder equity, at the end of the day, all parties affected should be happy about the distribution. The ideal win-win situation is to create the right kind of incentive to make people continue to toil for your company without it being too much of a financial burden for you.