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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 share of the equity.

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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 (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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CURATED FROM

CURATED BY

rubenlozanome

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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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.

How To Perform A Pre-Mortem

  1. Review: Discuss goals and explain the various roles and responsibilities to each of the team members.
  2. Set-Up: Anticipate a scenario where the project is over and was a disaster.
  3. Brainstorm: Each team membe...

Why do you need to find a co-founder, a CTO or a Tech partner?

Why do you need to find a co-founder, a CTO or a Tech partner?

There are different ways to solve the problem. You can find:  

  • Tech cofounder. A technical founder is one of the key roles in a company. It is a person who will be responsible for all the tech-related processes and have a share of overall profit. In th...

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