Equity · Venture capital

How to share startup equity with a new partner?

Anonymous

July 27th, 2015

I have a new valuable partner in my startup that completes me on marketing. He will be involved part-time.
Please share your experience - what compensation scheme would be reasonable in this situation?

I am thinking of something like this:
Mentor will get 10% of equity on $0 to $10M company evaluation.
Starting $10M the percentage will grow linearly, topping 30% at $100M+ company evaluation.
Diluted proportionally by investors.
Mentor will get 5% of influenced revenue made from Mentor's references.
As a founder, you’re always in fundraising mode (whether active or passive). In this course, we’ll teach you how to successfully raise follow-on capital, establish a valuation for your company, build an investor pipeline for your next round, and more...

Michael Barnathan

July 27th, 2015

Don't make things too complicated - you, your other founders and employees, and investors need to be easily able to understand the cap table.

Eleanor Carman Incoming BLP Sales Associate at LinkedIn

July 30th, 2015

We have tons of discussions about this very topic already on FD:Discuss. If you do a quick search for these keywords - equity, venture capital, etc. you'll find discussions that'll be helpful. Here are the specific discussions that I think might help!

Kenneth Larson Retired Aerospace Contracts Manager, MicroMentor Volunteer and Founder "Smalltofeds"

August 6th, 2015

Complete a business plan and an operating agreement together. The former defines the company, the latter defines the relationship. When the process is complete the equity share will be a natural fallout of the roles you have developed along the way.

You may view sample business plans and an operating agreement at the site linked below:


smalltofeds.com/2013/06/practical-intellectual-property.html