Often times I am asked by founders of an early stage startup on advice in dividing equity among the founders and, where applicable, early stage employees. While there is no science or math, or right or wrong answer, structuring equity at the early stages in not complicated if we apply logic, experience and sense of fairness to the process.
I have developed the attached chart based on my experience representing 1000’s of startup companies which is meant to be a high level framework. Founders will need to adapt this to meet the unique requirements of their venture. For example, if they don’t have any early employees, then move that part of the equity to the option pool; and, if there are only 2 instead of 3 founders then the 2 founders should allocate the numbers associated with the 3rd founder between themselves based on the same principles.
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