Giving away equity to new member in a startup?


1
I've been working on a startup for more than a year now, and as a developer, I created a nice product. But things got harder when I tried to sale it, as I have no talent for this. Then I met two people that would be really interested to do the sale job in exchange of equities.
I want to go further in this deal, and gave them 33% of equity each, so at the end of the process the company would be split equally. But, I don't want to give equities in exchange of nothing, so I want to give them max 5% each every 4 months if they reach financial objectives.
Here are a few questions
  1. Does it seems to be the right way of doing this?
  2. What should happen if they don't reach the objectives?
  3. Are there other things I should add to the deal?

Equity Cofounder

asked Feb 10 '16 at 14:52
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Francis L
33 points

1 Answer


3

This is called vesting, and is absolutely the right way to go about it. There should also be a cliff, a minimum amount of time they need to work (usually 1 year) in order to actually get the equity they've been earning per month.

This is a good guide to creating equity structures: http://thestartuptoolkit.com/blog/2013/02/equity-basics-vesting-cliffs-acceleration-and-exits/

answered Feb 15 '16 at 01:33
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Jay Neely
6,050 points
  • Thanks a lot! It really helped me! – Francis L 12 months ago
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