Friday
Tips/AdviceSeth Godin’s Advice on Equity
Equity is important, don't hog up the whole cake
So you just started up, and you don’t know how much of the company is yours. Ok, your partner put up the hardware, and you’re putting together the know-how. I bet you figure that it’s easy, 50-50 each.
Well, not exactly. If you’ve already read Seth Godin’s superb new article, you’ll be able to figure out that equity isn’t something you should divide right off the bat. Equity is how much of your company you own, and you can’t really know that before you do anything.
Give each owner a small piece (5-5 or 10-10), and then set a list of goals that have to be met. If you meet these goals, you get more equity. It’s kind of difficult to set up, but once you do this and smooth over the details, you’ll find that it’s much easier to see who has more stake in the company.
Also, remember that if you take investors or new partners, your equity will get smaller, so you can’t split the company in half. Make sure you take all of this into consideration before diving equity like it was a bar of chocolate.
Post Tags: Business, Chocolate, Company, Equity, Financial services, Investor, Seth Godin, venture capital
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