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Date of this Version

9-27-2019

Document Type

Book Chapters

Summary

  • Founders should not necessarily split equity evenly among cofounders; unequal splits can help prevent team dissonance and renegotiations as the company develops.

  • The timing of equity splits is critical, with most experts favoring early discussions of own­ership.

  • Companies should strive for capitalization tables that are simple in structure and easy to understand.

  • Capitalization tables should have equity pools set aside to anticipate non-founder compen­sation of new hires.

  • Equity dilution from future investors should be viewed in terms of the business’s overall financial strategy.

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

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