Sep 10 2009
∞
“ overvalue past contributions (coming up with the idea, spending time developing it, building a prototype, etc) and undervalue future contributions. Remember that an equity grant is typically for the next 4 years of work (hence 4 years of vesting). Imagine yourself 2 years from now after working day and night, and ask yourself in that situation if the split still seems fair. Another consideration is if one founder has had greater career success and will therefore significantly improve the odds of getting financed at an attractive valuation. One way to figure out how much this is worth is to estimate how much having that founder increases your valuation at the next financing and then, say, split the difference. So if having her means you can raise $2M by giving away 30% of your company instead of 40% of your company, let that founder have an extra 5%.
