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Founder's Pocket Guide: Founder Equity Splits
“How do we split the equity ownership of our startup?”
This guide provides a framework and process to help startup founders answer this common question.
Equity ownership affects the culture and sense of wellbeing of a startup. Founders typically sacrifice a great deal of life opportunities to work on a startup effort. In exchange for that sacrifice, a founder wants to feel the ownership equation with any co-founders is fair.
In detail, this Founder’s Pocket Guide walks entrepreneurs though the following elements:
• Take The Founder Test to make sure everybody deserves founder status
• Review the case for splitting your founder equity into equal parts
• Use the Equity Split Scorecard as a fair method to allocate more equity to highly skilled co-founders
• Solve common equity problems using founder vesting structures
• Answer common equity split questions like IP and founder-investors
Note that this guide does not go into how to use equity to attract employees or using equity to pay service providers, advisors, development companies, or other contractors. This guide focuses solely on the best practices of deciding the equity ownership split between the founders of a startup venture.
This guide provides a framework and process to help startup founders answer this common question.
Equity ownership affects the culture and sense of wellbeing of a startup. Founders typically sacrifice a great deal of life opportunities to work on a startup effort. In exchange for that sacrifice, a founder wants to feel the ownership equation with any co-founders is fair.
In detail, this Founder’s Pocket Guide walks entrepreneurs though the following elements:
• Take The Founder Test to make sure everybody deserves founder status
• Review the case for splitting your founder equity into equal parts
• Use the Equity Split Scorecard as a fair method to allocate more equity to highly skilled co-founders
• Solve common equity problems using founder vesting structures
• Answer common equity split questions like IP and founder-investors
Note that this guide does not go into how to use equity to attract employees or using equity to pay service providers, advisors, development companies, or other contractors. This guide focuses solely on the best practices of deciding the equity ownership split between the founders of a startup venture.
75 pages, Kindle Edition
Published March 21, 2016
94 people are currently reading
135 people want to read
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Displaying 1 - 8 of 8 reviews
May 30, 2020
Uses a scorecard method for equity splits, which I do not think it is reliable. I would prefer the slicing pie method or a founder agreement.
Yet, the sections on vesting are 4stars. He shares various vesting methods and mixes them. I would recommend it for quick info about founders vesting splits.
He does not discuss option pools, advisory pools or similar ideas.
Yet, the sections on vesting are 4stars. He shares various vesting methods and mixes them. I would recommend it for quick info about founders vesting splits.
He does not discuss option pools, advisory pools or similar ideas.
July 5, 2020
Good to start with and keep future reference
I enjoyed reading this book, it takes you through the basics and provides you with the right examples and tools. It is a good book to have for future reference.
I enjoyed reading this book, it takes you through the basics and provides you with the right examples and tools. It is a good book to have for future reference.
July 12, 2021
I have to say this is the most simplified book I've ever read about Startups. Worth for people interested in understanding what it means to have a Co-founder, splitting that equity and areas you need to fill the gap as founders to make your startup successful.
January 13, 2023
Did not pickup much useful information from this book. Worth a read for people who are thinking about doing a startup for the very first time. Another useful resource for equity split would be the YouTube video from Y-Combinator's Michael Siebel.
October 26, 2023
Easy read, took me 2hrs. Every founder should read in the beginning. Clear, brief sections with scenarios & suggestions. Helps in finding tangible ways to justify founder equity instead of feelings or emotions.
June 5, 2021
This book is great for anyone looking to understand the basics and get comfortable with various options available to them. I loved it and it served its purpose in my entrepreneurial journey
November 24, 2016
It's a short and concise explanation of he topic. It's USA centric and I wonder how much difference there is to other countries and regions or whether the same logic holds true for anywhere. A good read nevertheless.
December 6, 2016
It has been a great help indeed. A lot if work is ahead of me of course after reading it but it has confirmed that my concerns were right and I am on the right track! Many thanks to the author.
Displaying 1 - 8 of 8 reviews