Having issues deciding how to split up the equity in your business between your team (co-founder), advisors and potential investors? In this video, I provide some guidelines and some major DON’TS when thinking about startup equity.
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Okay.
Due to popular demand, I’ve decided to finally tackle the billion dollar beast.
And while it’s not easy to have a conversation about startup equity without putting the faint of heart to sleep, it’s territory that simply can’t be overlooked.
Because for any growth-oriented entrepreneur entertaining the idea of handing out equity in their company, the math absolutely matters…
And one small misstep can be the difference between accelerated growth or the speed pass to startup hell.
So if you’ve ever wondered what a healthy equity breakdown looks like for all key stakeholders (founders, advisors, investors and team members)…
… then give this new video a quick spin.
As you can see, used appropriately, equity can be an amazing way to incentivize team members and attract key advisors and investors.
Like I did with Uber’s Travis Kalanick
But if you don’t enter the conversation with clear knowledge of the right benchmarks to shoot for…
… then you’re setting yourself up to either give too much away or lose talent and investors to other startups playing a much sharper numbers game.
So get your numbers right.
Make the right offers.
And then step up to the plate and use equity for the growth accelerant it is.
To splitting the pie…
(and watching it grow),
– Dan
Don’t forget to share this entrepreneurial advice with your friends, so they can learn too: https://youtu.be/hWA1b8owinc
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ABOUT DAN MARTELL
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“You can only keep what you give away.” That’s the mantra that’s shaped Dan Martell from a struggling 20-something business owner in the Canadian Maritimes (which is waaay out east) to a successful startup founder who’s raised more than $3 million in venture funding and exited not one… not two… but three tech businesses: Clarity.fm, Spheric and Flowtown.
You can only keep what you give away. That philosophy has led Dan to invest in 33+ early stage startups such as Udemy, Intercom, Unbounce and Foodspotting. It’s also helped him shape the future of Hootsuite as an advisor to the social media tour de force.
An activator, a tech geek, an adrenaline junkie and, yes, a romantic (ask his wife Renee), Dan has recently turned his attention to teaching startups a fundamental, little-discussed lesson that directly impacts their growth: how to scale. You’ll find not only incredible insights in every moment of every talk Dan gives – but also highly actionable takeaways that will propel your business forward. Because Dan gives freely of all that he knows. After all, you can only keep what you give away.
Get free training videos, invites to private events, and cutting edge business strategies:
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Hi Dan, Great vid. I found an investor who is willing to cover all business expenses for 50% equity. I also have a friend who is an expert at starting up businesses to consult me. I don't have money to pay him and he says that he is in it for the long-run. He is literally going to hold my hand through the entire process of building this business. Do you have advice as to how he should get reimbursed when the company makes money? How much equity should I offer him? Thanks for your time and for the vid!
I am a founded of a company and all the idea is mine i am searching for co founders then how much equity do i need to give them
Im thinking of negotiating 15% equity for an initial $50,000 investment for a restaurant concept startup. We need $250,000 to get off the ground. I'm struggling to figure out if that is too low or too high of a percentage, and I keep going back and fourth. I still need to find more investors too, so I don't want to give up too much just for $50k. Thanks!
Very informative..
I am planning my start up, and one guy, who is technically sound want to get more into the business, I am wondering if I should offer him equity or hire him as technical consultant? Though I have offered my complete website development task to a company but I need this person just to guide me at technical front from time to time.
Please suggest.
Hi, I have a question. Let's say I gave 20% for my 1st investor. Will the equity for the next investment round be split taking in
consideration the 1st investor's share or will it be deducted only from the founders' remaining share? In other words, will the 1st investor keep his/her 20% after the next round? Thanks in advance.
i just partnered with someone for a new company. i gave them 10% the question is how does dilution work. and how do class a shares work vs class b if we go public?
if i build a company with 5 people in it and each invest about let say $100. so the total would be $500 and we split the equity evenly resulting in 20% each person. suddenly an investor is interested in investing let say about $80. How much equity for the investor ?
Thank you very much Dan!!! I'm a startupper looking for investors, so your video was G R E A T for me :-).
THANK AGAIN!!!
Hi me again adding more details I know that you need to know more about the whole business in order to provide correct recommendations feel free to ask thanks very much appreciate really really a lot. I was thinking anywhere in the region of 70% to split between us the founders. Thanks man
Hi Dan great great video thanks very much for the info but I was wondering if you could share more information on actually how to divide equity between the founders, we have three, me I am the founder and the inventor and also an investor now the father of the idea then there is a project manager and a coder a developer how do you roughly go here thanks very much appreciate your help.
Thanks for reply. How much % Of equity we keep in free pool for upcoming investors in future. While we distribute quity among founders , small investors as well advisors
Nice video! +1