What should the founders include in their agreement?
Here’s what you should include in a founders’ agreement:
- The Names of Co-Founders and the Business. The agreement names the founders and the company they’re agreeing on the rules for.
- Company Goals.
- Each Owner’s Roles and Responsibilities.
- Equity Breakdown.
- Vesting Schedule.
- Intellectual Property.
- Exit Clauses.
- Find a template.
Should you split startup equity with your first hires?
Splitting startup equity with your first hires will often require negotiations, and the process will vary from employee to employee. Once you start hiring outside your core team, you’ll want some type of predictable system in place for sharing equity. There is no right answer for sharing startup equity with co-founders and early stage employees.
How to divide equity fairly among early-stage startups?
This guide provides an introduction to the ways in which companies determine how to divide equity fairly among the founders and employees at early-stage startups. Granted, there is no one right way to structure an equity split, and the best solution likely depends on the specific circumstances of each startup.
Why should the startup founder be allocated more equity?
For that reason making sure the startup has the resources and capital to grow, and execute on the idea, is ultimately why the business founder should be allocated more equity. Remember, if a startup fails because the business didn’t grow and execute, 50\% of nothing is zero.
What should you consider when dividing equity between founders?
Any previous business experience a founder has in building a company should be given more weight when dividing equity. Building a startup is difficult work, and any prior experience fundraising, connections to investors, creating an MVP, or scaling a product are invaluable assets that increase the startup’s chances of success.