Equity split for advisors, part-time and full-time founders?


1

I am a part of a software startup that includes the following six founders. We are about to seek VC and we need to make sure that we split the equity in a fair/correct manner. Based on the following information, how should we allocate equity in our corporate formation?

Me: I quit day job 10 months ago and work ~ 12hr/day without salary (I have been living off of my savings). I come from a tech background. I have paid Founder 1's salary for 10 months. I have been the co-architect for 10 months. I designed and brought the software foundation to the rest of the team. I wrote the majority of the business plan. I Have business mentors with 8 figure exits. I will continue to work full-time after we raise VC.

Founder 1: Quit day job and works ~6hr/day. Is payed by me at half of the rate of his previous job. Comes from a tech background. Has been the lead architect for 10 months. Will NOT continue to work for the company after we raise VC.

Founder 2: Comes from tech background. Spends ~ 2hr/Week with design details. Joined the team 6 months ago. Will NOT work for the company after we raise VC.

Founder 3: Comes from a marketing/HR background. Spends ~ 5hr/Week with marketing/HR details. Is interested in working part-time after we raise VC. Has good marketing contacts. Introduced me to Founder 4. Joined the team 4 months ago.

Founder 4: Comes from a finance background. Spends ~ 1hr/Week in a "show you our progress" meeting. Has good VC contacts. Came up with the (idea) very vague company concept. Is interested in being an advisor. Will NOT work for the company after we raise VC. Joined the team 2 months ago.

Founder 5: Comes from an unrelated science background. Spends ~ 1hr/Week in a "show you our progress" meeting. Has family business contacts with 8 figure exits. Has contacts in our business's industry. Will begin full-time work after we raise VC. Joined the team 2 months ago.

Equity Part Time Founders Agreement Shares

asked Sep 23 '14 at 23:35
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User34135
11 points

1 Answer


2

Let's see. Founders 1, 2 and 4 are not interested in staying after you raise money. Founder 3 is also not interested in going full-time. Founder 5 is spending about 1h/week, which means that's a small advisor, nothing like a founder.

Conclusion: it looks like it's just you.

People who agree to go full-time after you raise money are signaling that they want a pay-check, unlike real co-founders. Expect to give them 1-5% after money is raised. Advisors should get 0.25 to 0.75% (vesting over 2 years).

answered Sep 26 '14 at 03:17
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Alain Raynaud
10,927 points

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Equity Part Time Founders Agreement Shares