GettingStarted
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If there are 10,000,000 shares. One founder has quit a job and is working full-time on the project. Another founder is working only part-time but is normally much more highly paid than the first - how to figure out the equity split? Then factor in a very junior person?
As the founder of a company that recently went through a founding members equity dispute, I can offer some advice. Of course any decision about equity is relative to your plans but there are some guild lines that can help.
First decide what your long term plans are. Are you planning on raising money? Will it be Family/Angel/VC/Small Business Loan? The thing to consider here is that at each stage where a new member is brought in there will some level of dilution for the invested partners. How much you decide to give should come with a clear understanding of what their percentage ownership will be at each major step in your long term plan.
With dilution you should also establish if the shares are "voting" shares or not. It may make perfect sense in the beginning to have a 50/50 split between you and your partner, but if there isn't an upfront understanding that you plan on raising more money later and you can't expect their cooperation then you may find your self stalled for months while you work this out.
As far as hard numbers go, thats really hard to say, but here are some figures I came to while restructuring our equity ownership to make us more investor friendly. I, (the founder, who created all of the source code, web pages, functionality and even most of the initial deals) own 85% of the company. My partner, who contributed $20K, opened a lot of doors, and setup some fruitful sales calls but who prefers to keep his day job for now, and take a back seat in managing the company owns 7% (a lot I've been told by some VCs) The remaining 8% is owned by my family who have been the primary source of investment. My family and my partner all have non voting shares and there is an expectation that all of our ownership will be diluted in the next round of fund raising (naturally mine will be diluted the most). I am currently trying to attract some sales talent and I am planning on offering between 2% to 4% on non diluting ownership which, along with a salary can be quite lucrative.
In the long run, I would like to make stock options part of my employment strategy, because I believe that people who work hard to build a company should share in it's success. Anyone should feel free to correct and change my numbers if they are way off base. And good luck with your startup.
