How shares should be allocated among startup founders?

As a rule, independent startup advisors get up to 5\% of shares (or no equity at all). Investors claim 20-30\% of startup shares, while founders should have over 60\% in total. You may also leave some available pool (5\%), but don’t forget to allocate 10\% to employees.

How do you allocate shares to co-founders?

Dividing equity within a startup company can be broken down into five simple steps:

1. Divide equity within the organization.
2. Divide equity among company founders.
3. Allocate money to investors.
4. Divide the option pool into three groups: board of directors, advisors, and employees.
5. Create a vesting schedule.

How many shares should a startup authorize?

The commonly accepted standard for new companies is 10 million shares. When you build a venture-backed startup designed to scale, you will need to issue shares to an increasing number of employees. Authorizing 10 million shares means it will be unlikely you’d ever need to offer someone a fraction of a share.

Can a company Issue founder’s stock?

The company may also issue founder’s stock for assignment of intellectual property. Founder’s shares are common stock shares. In most cases, startup companies issue them at the time they incorporate. The shares are issued at very low prices and are normally allocated to the initial players or founders.

How many shares of common stock should a startup company issue?

Thus, if the certificate of incorporation authorizes 10,000,000 shares of Common Stock, an aggregate of 5,000,000 to 8,000,000 share should be issued at incorporation. If the startup plans to bring on additional founders in the very near future, or for some reason wants a large option pool, then that initial number should be closer to 50\% than 80\%.

How many shares should be issued to founders at incorporation?

How Many Shares Should be Issued to Founders at Incorporation? I typically advise issuing 50\% to 80\% of the authorized shares of Common Stock to the initial founders upon incorporation.

What percentage of a company does a founder own?

For instance, if your startup has two founders, and you allocate each founder 4,000,000 of the 10,000,000 authorized shares, both founders would own 50 percent of the company. This ownership percentage will change once the company issues additional equity.