From assembling your team, to incorporating the business, there are a ton of moving parts to forming a startup. We’ll show you what you need to prioritize so you can start off on the right foot.
PHASE 1 Key Issues This quick primer will help us shape how to think about equity in a realistic sense while emphasizing importance of getting everything in writing. PHASE 2 Structure We’re going to examine the 3 most popular methods for issuing stock, helping us determine which version best suits our needs. PHASE 3 Splitting Equity To do this properly, we’ll need to know what our contribution to the company is worth now, what will it be worth in the future, and how to make adjustments down the line. PHASE 4 Managing Equity We’ll see how managing equity is all about properly planning ahead to handle the changes that will inevitably occur across the company over time.
We’re going to identify and isolate each of the key issues in splitting up equity in a startup company. Then one by one we will lay out which options are available, how most startups address this problem, and what key decisions the team will need to make to split the equity fairly and manage a plan long term.
Achieve consensus among team members on key equity decisions and issues before getting the lawyers involved. Weigh the pros and cons of the most popular types of stock issued to employees, partners, advisors, and investors. Learn how to set up a vesting schedule to allow members to earn stock over a period of time. Understand how valuations are set and how it factors into splitting up equity. Learn to value individual team member contributions now and in the future to determine how to split equity. Manage equity long term and have a plan in place to account for changes to stock as members are added or removed.
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