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Founding Partner Equity Percentage Principles?

Myself and four partners are starting a peer to peer social betting application. We are seeking advice on best practices for equity splits? Key factors; idea origination, sweat equity, $'s invested, domain expertise, start-up experience. Also, any insights on starting %'s and vesting periods are welcome.

5 Replies

Kevin Carney
4
0
Kevin Carney Entrepreneur
Content Marketing Training and Consulting
Get this book.

http://www.amazon.com/gp/aw/d/B0096EFHBI?ie=UTF8&redirectFromSS=1&pc_redir=T1&noEncodingTag=1&fp=1
Mark Fallows
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Mark Fallows Advisor
Founder & Partner at CURIOUS NYC
Thanks Kevin - yes I have been looking at their smart tool
http://slicingpie.com/the-new-pie-slicer/
Steve Simitzis
1
1
Steve Simitzis Advisor
Founder and CEO at Treat
I love the calculator at foundrs.com

It's the easiest and fairest way I've seen. Then do 4 year vesting for all founders.
Mike Moyer
1
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Mike Moyer Entrepreneur • Advisor
Managing Director at Lake Shark Ventures, LLC
Thanks Kevin for plugging my Slicing Pie book and thanks Mark for looking at my software!

Slicing Pie is the only equity model on the planet that will guarantee a perfect split. Unlike traditional equity models that rely on rules of thumb, negotiation skills and guesses about future value, the Slicing Pie model allocates equity based on the relative value of risk taken by each participant.

When you contribute something to a startup such as time, money, ideas or anything else you are taking a risk. The amount of that risk is equal to what you would have otherwise been paid on the open market. You are, in effect, betting the fair market value of the contribution on the future outcome of the company. Just like you might bet cash on a game of Blackjack. If you and I each bet $10 on the game. We would each deserve 50% because we bet the same amount. If you bet $20 and I be $10 you would deserve two-thirds and I would deserve one third. It's the only fair way to do it.

Slicing Pie provides a formula for the allocation and recovery of shares in a company using relative risk.

All other equity models will cause problems ranging from mild resentment of others to all-out equity wars that could end the company.

Thanks for taking a look!
Dan Gordon
2
0
Dan Gordon Entrepreneur • Advisor
Entrepreneurial Digital Healthcare Transformation Champion
Were also using Mike's Slicing the Pie method. It works well

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