65% of startups fail due to co-founder conflict, according to Harvard professor Noam Wasserman. To help you avoid conflict, we’ll give you the tools you need to determine the right equity split, including the framework to measure contributions, case studies and more.
A.I. Engineer / Entrepreneur / Founder & CEO @ Umazed / Kodo Startups
September 21st, 2016
It depends. Actually, in my experience, 20-25% is the norm. Here is a typical example. X VC company evaluates or values your company at 8 million pre. Pre meaning before they give you money in exchange for equity/shares/preferred stalk, they value you it based on their research. Then let's say they give you 2 million in exchange for equity/shares, then out of thin air, your company issues them those shares. So Post evaluation your company is worth 10 million. Basic math. 8 pre 10 post 2 million in seed funding, in this example you give up 20% equity in exchange for 2 million. That's as basic as an explanation as it gets. There is an option pool, but you can argue to keep it between 10-15% if you or a team member is going to be the CEO/CTO or C level.