{ "media_type": "text", "post_content": "Equity\nI'm having trouble determining how much equity the \"sales\" cofounder should get. I'm the one who provides the actual content / strategy of the business. Atm the new sales cofounder will help with branding etc. \nI have a hard time to award such a cofounder a large sum of equity since I'm the one who is designing the services etc. The cofounder does not provide actual input, but is more of a soundboard. \n\nIs there a rule of thumb for deviding stock? Anyone who had this situation before?", "post_id": "6105a3909901d800299d60a3", "reply_count": 9, "vote_count": 3, "bowl_id": "5b0ec788cf11a800139f9490", "bowl_name": "Startup and Entrepreneurship" }

Equity I'm having trouble determining how much equity the "sales" cofounder should get. I'm the one who provides the actual content / strategy of the business. Atm the new sales cofounder will help with branding etc. I have a hard time to award such a cofounder a large sum of equity since I'm the one who is designing the services etc. The cofounder does not provide actual input, but is more of a soundboard. Is there a rule of thumb for deviding stock? Anyone who had this situation before?

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You could create multiple share types. (I’m assuming you’re seeking VC funding in anC-Corp). So think about, say, Class B shares that have different ways of getting dividends, depending on performance, etc., that aren’t the same as how Class A shares are treated. Then this individual gets a certain percentage of equity on the Class B shares, even 100%, but such shares are treated differently from Class A shares. There are a million ways to do anything, you know!

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There are only two fundamental business questions: What are you (value prop) How do you sell it (value capture) Find out what percent of that you can figure out on your own without branding, sales, and a soundboard - then choose to compensate accordingly. If you trust someone enough to call them a founder you should probably think about what you'd lose if you didn't have them.

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So he/she is a “Soundboard”. Does that mean they’ve had meaningful input? Have their “Soundboarding” ideas made it into the design? They’ve provided marketing/sales. What percentage of sales have they provided to the start-up? Have you created sales yourself? Would it be easy to replace this individual? - All valid questions in determining value, IMO.

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Read the book slicing the pie. It may help

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…and by “new cofounder” do you mean s/he has been with you from the beginning? Did you raise the seed funds? Did you recruit him after you started? If the latter, he isn’t a founder, he is a partner or employee. In that case commissions for sales and maybe 5-10%.

Are you also coding yourself? How involved was the sales person in the startup? Were they from day-1? Could you reward them with sales commission instead? There’s no right answer, could be anything from 0% to maybe 20%

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