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What is Startup Equity?

What is Startup Equity?

The term startup equity refers to the ownership of a startup, usually demonstrated as a percentage of ownership (or shares) given to individuals that contribute to the growth of a business. These could be your co-founders, investors, employees, and even experienced advisors.


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Fun Fact

Fun Fact

Fun fact: Did you know that Jeff Bezos, the 4th richest person alive and the CEO of Amazon, owns less than 10 percent equity in Amazon, a company he founded? 😉


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Factors to consider when splitting startup equity (1)

Contribution. One of the most common factors to consider when splitting equity is the relative contribution of each founder, advisor, or employee. This can include things like the time and effort that each one puts into the company, the expertise they bring to the table, and any ...


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Factors to consider when splitting startup equity (2)

Roles and responsibilities. Founders should consider the roles and responsibilities of each team member when determining equity splits. For example, a founder who is taking on a key leadership role or an employee who has a more specialized skill set may be entitled to a larger sh...


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Factors to consider when splitting startup equity (4)

Market conditions. The state of the market and the industry in which the company operates may also influence equity distribution. Say, if a company is in a highly competitive market or seeking future funding from external investors, the founders need to give a larger share of equ...


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Factors to consider when splitting startup equity (5)

Legal and tax considerations. There may also be legal and tax implications to consider when splitting startup equity. For example, founders may want to consult with a lawyer or accountant to understand the tax implications of different scenarios to ensure that the company is stru...


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Factors to consider when splitting startup equity (3)

Future plans. Founders should also think about long-term goals and how equity splits may impact those plans. For example, if one founder plans to take on a full-time role with the company while the other intends to remain a passive investor, this may affect equity split.


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Who gets equity in a startup?

Who gets equity in a startup?

When your startup is in the initial stages, the founder or the co-founders usually own it entirely, typically in a 50/50 split, or 60/40, depending on various conditions.

As you grow, equity is distributed among those who contributed to fund your startup, give you advise, or develop your pr...


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Growth Marketing Specialist for Startups.

Because we don't think about how to distribute equity in a startup until is late and when it is complicated to change things.

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Equity Market

Equity Market

An equity market is a market in which shares of companies are issued and traded, either through exchanges or over-the-counter markets. Also known as the stock market, it is one of the most vital areas of a market economy. It gives companies access to capital to grow their business, and investors ...

The general principles of equity awards

The general principles of equity awards

Giving equity to employees means making them shareholders, aka owners of the business. Some things to consider:

  • Cover the downside: schematically, equity should cover at least the opportunity cost taken by founders and employees when they accept a discount on the salar...

What is A Share?

What is A Share?

A single share of a company represents a small, but real, ownership stake in a corporation.

One stock's percentage of ownership is determined by dividing it by the total number of shares outstanding.

Stock ownership generally entitles the owner to corporate voting rights and to any di...

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