Equity Allocation in Startups

For latest version: please go to https://academicentrepreneurship.pubpub.org/pub/ug7kijaq/release/5 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.