Jun 15
How co-founders should split equity and why vesting protects everyone, with practical guidance on fair splits, vesting schedules, cliffs, and avoiding disputes.
Loading...
seen from United States
seen from Netherlands
seen from China
seen from United States
seen from United States
seen from Malaysia
seen from Sweden
seen from Indonesia
seen from United States
seen from Ukraine
seen from Honduras
seen from China
seen from United States
seen from Canada
seen from United States
seen from Azerbaijan
seen from Malaysia
seen from United States
seen from United States
seen from United States
How co-founders should split equity and why vesting protects everyone, with practical guidance on fair splits, vesting schedules, cliffs, and avoiding disputes.
Anya is live and ready to show you everything. Watch her strip, dance, and perform exclusive shows just for you. Interact in real-time and make your fantasies come true.
Free to watch ā¢ No registration required ā¢ HD streaming
The Punch in the Gut: How to Navigate a Down Round of Funding and Live to Tell the Tale Let's not sugarcoat it. Hearing the words ādown roundā feels like a failure. Itās a direct hit to the ego, a challenge to the vision youāve bled for. After all theā¦
It's not an easy conversation to have, but you need to have it. Hereās an approach for having the discussion with your co-founders and a methodology for dividing up the pie. I also spent some time on capitalization and dilution, and what to expect to happen to your ownership as you raise capital.
Start button on pause.
It's been almost two years since I last wrote in this - it feels good to return. Consider this the comeback.
As an FYI, since I left the blogosphere, I did some product management at an agency (one of the products I managed won anĀ award) and am now in an incredibly fortunate position of sitting at the other side of the table - I'm at theĀ Portland Seed Fund, where I get to manage legal and investment due diligence, provide research and support, as well as learn from the trials and tribulations of the 25+ early stage startups we've invested in. (PSST - Class 04 applications are up - apply now!Ā They're due Jan. 7, 2013.)
Reading through my writing, it's incredible to see how much I've grown in the last two years.
Let's recap theĀ gistĀ of my last post -
Attempted a business with a technical co-founder while I was living in France. Ultimately failed for founderĀ dissolution reasons but managed to build a prototype and pitch to some interested VCs from Italy at LeWeb.Ā
Declared that I was starting a social venture - a paper and writing goods business that supported educational programs at risk of being cut. It was called Turn the Page.
I said: "The problem with the other project was that it was so heavily reliant on someone else, whether it be (more technically oriented) co-founders who shared equity in the company, or outsourcing the programming and back-end design to cheap developers in India, China or wherever. This venture, on the other hand? Can be all me, for now.Ā I donāt have to share equity, I could bootstrap/get just enough from friends and family if needed, and manage my own business development, marketing and operations."
Status report? I never started Turn the Page. Reading this post was a humbling experience because it is very, very clear how ignorant I was. One can appreciate the ambition, but what is ambition without execution? I completely overlooked and underestimated a crucial element two years ago -Ā the power of the co-founder(s) on the start.
Someone asked me what happened with Turn the Page and I said, "I never really started it." He said, "What does 'starting' mean?" It was cute of me to say previously that "I don't have to share equity" and I could do everything myself, but sharing that equity, that passion - this is important to starting anything. It brings a level of accountability I simply didn't have when I had what I thought was my coming out party for Turn the Page. And that's why I never "started" it. No one was there to ask me, "How's product design coming along?" or "Land that purchase order yet?" The decision to start a new business - the "Let's do it!" moment - is an easy song when you're singing to yourself. But to create harmony, you need other vocalists - co-founders balance the song. They remind you of your commitment, as much as you remind them of theirs - it is that harmony that makes any new venture breathe into life.Ā I still love my idea; after all, I had a judging panel of investors evaluate its potential and was given $3K to start it. But like all ideas - the epiphanies, as I like to call them, and yes I have many - they are a dime a dozen. As well, since the founder dissolution, I've learned how important it is not to force the marriage. Finding the ones you trust enough to keep you accountable takes time, patience and a little serendipity. When the potential harmony unfolds in front of you, don't underestimate its potential. Seize and nurture it, because it might just be the ticket you need toĀ "officially" start.Ā