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How to Split Equity Faculty Entrepreneurship Workshop April 27 2004

Source: web.mit.edu
Topic: Entrepreneurship

Sort Desciption: Our April 27 Faculty Entrepreneurship Workshop How to Split Equity focused on the. crucial and potentially awkward process of determining founders' equity ...

Content Inside: How to Split Equity Faculty Entrepreneurship Workshop April 27 2004 Our April 27 Faculty Entrepreneurship Workshop How to Split Equity focused on the crucial and potentially awkward process of determining founders' equity in a startup as well as how investment impacts that ownership. Three panelists walked through these processes: Eric Silverman Principal and founder of St. James Capital LLC; founder and partner of Transitions Capital; and serial entrepreneur Alex Laats Deshpande Center Catalyst and venture partner at Commonwealth Capital; serial entrepreneur; and a former officer at the MIT Technology Licensing Office Barbara Johnson Partner of Testa Hurwitz & Thibeault LLC's Business Practice Group Barbara is involved in all aspects of business creation. Alex and Eric (MIT alums) are serial entrepreneurs who have started numerous businesses. How to split equity its one of the first important issues facing a new company said Deshpande Center Executive Director Krisztina Holly who moderated the discussion. The panelists unanimously advised faculty entrepreneurs to make decisions about founders equity preferably with a lawyer present as early as possible in the process of founding a company. The two main purposes of founders equity said Barbara are to compensate founders for work done up to the point of incorporation and to give founders an incentive to contribute to the companys future success. The discussion looked at four key issues surrounding founders equity. Who owns how much of the company at the outset? Its the percentage of what you own that matters not the number of shares stressed the panel. Misunderstanding can result from confusion over the number of shares each founder owns. The number of shares can change over time e.g. they can increase with further investment which results in dilution. Thats not necessarily a bad thing. People accept dilution said Barbara because a smaller piece of a bigger pie is better than 100 percent of ...

split startup equity, founders equity splits

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