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Founder Equity

Founders equity, or founders stock, is issued to the founding members of startup companies.

Founders Equity

There are several things to be aware of when it comes to minting ownership shares versus using equity as leverage to raise money or to compensate employees. First, if your company has more than one founder, it’s important to know how to share or split founder equity. Knowing how to allocate this stock can be tricky, considering that the company is still in its early stages and it can be hard to fully assess the contributions of each team member. You have yet to truly determine their ultimate value to the organization.

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Founder Equity
Founder Equity Calculator
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Another thing to keep in mind is that typical founder equity involves a vesting schedule, a type of incentive program that outlines how and when shareholders can access their stock options. There are a few reasons that founders stock comes with a vesting schedule. One, it helps ensure that team members are committed to the organization.

It can be common for founders to part ways with companies early on, and a vesting schedule restricts them from taking advantage of the benefits prematurely. Vesting schedules may also be created in the event that a business expects to receive outside funding down the road. This can help set the ground rules, so to speak, for how equity should be divided.

When handling a startup there are many things to take into consideration, and founder equity is just one of them. Golden Section’s founders studio helps users grow their startups, providing holistic guidance to help them along their journey.

Unlike some other platforms, Golden Studio sees founders through the entire startup process, assisting them with everything from early-stage funding to sidecar opportunities. Partnering with Golden Section can help you get a handle on your founder stocks, as well as anything else you need as you grow your startup.


Startup Equity Calculator

A startup equity calculator can help you make equity projections and get a better understanding of your stock options. Generally, equity calculators will ask you to input your start date, the initial amount you were given in stock and the company’s number of outstanding shares. It might also ask questions about liquidation. Your result should tell you how much you’ll be able to make each year. A founder equity calculator is a great tool for looking ahead to the future.

Founder Percentage Calculator
Co Funder Equity
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If you want to see what would happen if you were to issue new equity, you can use an equity dilution calculator. Similarly, a founder percentage calculator can help you determine what percentage of your total equity can or should go to each member of your founding team.

There are many types of equity calculators that can each help you understand how to allocate and manage your stock for best results. Rather than relying on guesswork, you can plug some actual numbers in to get data-based answers. This can be extremely helpful for startup founders that are still trying to figure out how to best manage their equity and divide things up among others in the organization.

Wondering if there is a better way?

Golden Section was built on the wisdom of experienced leaders and can help founders assess their equity options. The platform follows entrepreneurs on their path to success, helping them navigate risks and leverage effective playbooks and methodologies. 

While equity calculators and other quantitative tools can help you gain a better understanding of your stock and equity options, taking advantage of Golden Section’s platform can put you in an even better position to appropriately manage your equity and achieve greater business success in the long term.

Factors for Consideration

How Much Equity Should A Founder Keep?

So, realistically, how much equity should a founder keep? There isn’t necessarily a right or wrong answer to this question, but it’s important to consider everyone that had a hand in the startup and how much they are each contributing. For instance, if you employ a lot of technical staff, you will definitely want to include some sort of tech co-founder equity in your stock options. Your part-time employees should get their share of part-time co-founder equity, and so forth.

In terms of a typical startup equity %, it’s generally recommended that you allocate 10-15% to your employee stock option pool. This can, of course, vary depending on how many employees you have and what your founders are keeping. In short, there isn’t a one-size-fits-all approach to equity allocation, but there are some general tips and guidelines you can follow to get a better idea of how to appropriately manage your stocks. While many founders tend to keep a larger portion of the total equity, you will have to divide this up if you have more than one founder.

There are many ways you can do so, and it can be helpful to assess your options from every angle. What works for one company may not work for yours, so though you might look to another business and see that they’re achieving success by allocating X amount of equity to their founders, there is a good chance you will need to adjust, depending on your specific business needs. If your needs are particularly complex, you may want to reach out to an equity advisor for additional guidance on how to split your equity, what options to offer your employees, and what you should do to get the most out of your stocks.

Percent of VC-backed founders (less than 1% of all founders) get $0 when their company sells

Determining Equity

Co-Founder Equity

Determining equity shares is easiest for startups with a single founder. If you’re like many companies, though, you may be forced to contend with the dilemma of divvying up your shares between two or more founders. Trying to find the right founder equity split can be challenging, as there are many factors you need to consider to ensure that you find the right startup equity split for your business. You need to think about your total equity, as well as what each person might receive, depending on their contributions to the company.

While you might assume that a perfectly even split is the way to go, other factors can influence the amount of equity each founder can or should receive. It’s important to have frank, candid discussion from the outset, determining exactly how much each person is contributing to the success of the startup overall. Finding the right co-founder equity split isn’t always about splitting things evenly across the board, but allocating the appropriate amount based on how much each person is bringing to the table. Just because you have two founders doesn’t necessarily mean that each of those founders is contributing equally.

How To Divide Shares Between 3 Partners

Things get even more complicated when you’re trying to figure out how to divide shares between 3 partners. As is the case with two founders, it’s important to sit down and determine how much each person is contributing to the success of the organization. It can be helpful to think of this in terms of their overall value. For example, you may find that your one co-founder has a much harder job than another, and is doing much more on a day-to-day basis to help grow the company, so when thinking about how much equity to give co-founder team members, you need to consider each person’s specific role.

A co-founder equity split calculator can give you a co-founder share percentage and help you come to a decision. You might also want to think about who came up with the original idea for the development of the company, as well as those that have gone above and beyond to get the company to where it is today. Don’t forget to look at the bigger picture, thinking about how each person’s contributions today will help the business succeed tomorrow.

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How much equity to give co founder

Late-Stage Co-Founder Equity

Late-stage co-founder equity refers to the equity that exists during the late stages of a startup. By the time a business gets to this phase in the journey, it is typically in a position to offer greater stock options. In addition, businesses at this stage are usually a lot more stable than they were in the very beginning, and this impacts late co-founder equity shares. They are also able to assign more accurate monetary values to equity shares. Each startup co-founder will need to reassess their options at this point and determine the best path forward.

Founder Equity Portfolio 
Startup Co Founder 
Co Funder Equity

Late-stage startup founders typically have a founder equity portfolio detailing all of their investments.

This can help the company make better decisions about how to divide equity shares as the organization continues to grow. If you are looking to go public, this is also the point at which you should be preparing to launch your IPO. You will need to factor these changes into the current equity shares you offer founders and employees. The late stages of a startup can be exciting, but it’s important to get your ducks in a row to prepare for the next step in the journey.

Whether you’re a late-stage or early-stage startup, you can benefit from the seasoned wisdom offered by Golden Section experts. By learning from the mistakes of other founders, you can be better equipped to tackle the challenges that come your way as you grow your startup and determine how to manage your equity shares. Within Golden Section’s playbooks, you can find an operational framework for creating a structured, successful organization. Most importantly, you can find the tools you need to unlock capital and drive business growth.

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Here’s what our portfolio company founders are saying…

From our MVP in 2015 to demonstrated Product Market Fit to strategic support with our growth funding, the Golden Section team has been an indispensable partner and resource for System Surveyor.

Christopher Hugman
Founder & CEO, System Surveyor

Since QMSC’s inception, Golden Section has provided valuable direction regarding strategic market alignment, branding, and most importantly intuitive guidance for our technology roadmap.

Marshall R. Williams
Founder, QMSC

As an entrepreneur, I need to have a partner who understands my vision, not just a digital order taker. Golden Section has exceeded my expectations, providing tools and people to help grow my business rapidly.

Charles Turner
Founder & CEO, KARE

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