What this guide helps you evaluate
Founders allocating ownership before or shortly after company formation.
This page is designed to help you compare the moving parts, organize due diligence and ask better questions before you commit money, sign a contract or change an operating process.
What to compare first
- Expected long-term role and time commitment
- Cash, IP, customer and operating contributions
- Vesting, cliff and treatment of departures
- Board, voting and reserved decision rights
- Future fundraising, option pool and dilution
Step-by-step process
- 01
Write down each founder's expected role and contribution for the next several years.
- 02
Discuss equity together with salary, decision rights and vesting.
- 03
Use vesting so unearned equity can be repurchased when a founder leaves early.
- 04
Assign relevant IP to the company and document confidentiality obligations.
- 05
Have startup counsel put the agreed economics into formation and shareholder documents.
Common mistakes and risk checks
- Splitting equity once and ignoring changing roles before vesting is set.
- Leaving IP personally owned by a founder.
- Using equity percentages without considering future dilution.