You can go ahead and purchase 10,000,000 shares for $1,000, and each share will be worth $0. So far example, an investor could own 2,700 shares, which equates to 25% in equity. Graduates of the Founder Institute are creating some of the world's fastest growing startups, having raised over $1. For instance, consider this simple equity structure without founder vesting: Co-Founder 1 – 40%; Co-Founder 2 – 40%; Investor – 20%; If co-founder 1 decides to leave, he will take 40% of the shares with him. Automate your equity plan. In this scenario, we end up with 51% equity in the startup for the founders after the A-round. Then, multiply the resulting number by 100, and you will have your profit margin. Self-funding means that you independently provide the funding you need for your startup. One such method is the Founder’s Pie calculator. Hi. The median company valued at $50 to 100 million employs 52 people in addition to the founders. What are startup stock options. A business plan is crucial for startups, outlining goals. The basic formula is simple: if you need to raise $3 million, and investors believes the company is worth $10 million, you will have to give them 30% of. This is mainly true for two-partner, 50-50 equity splits. To use the Startup Cost Calculator: 1. Most founders use industry survey data to learn how much different roles get paid (though these surveys tend to come with varying degrees of. I have yet to find a startup equity calculator that was not developed by a very intelligent person with the best intentions of helping hapless founders make good choices about equity. By taking this course and utilizing my easy-to-use Startup Equity Calculator (UPDATED to handle up to 7 cofounder slots--more than what 99. In some cases, co-founders and/or employees will agree to work for lower salaries in exchange for. 11. The value of shares issued by a startup (or other company). Risk Layer: When you join a startup, there’s a big risk difference. The number of shares available in the business is at the discretion of the founder or co-founders of the. New shares are added when the stock option holders exercise the option. Investment Amount / Valuation = % Equity Offered. Once they hit the four-year mark, they can swoop into 100% of their equity. This can be taken from similar job postings and the market as a whole. Your analyst will then submit a draft 409A report in a few days. The ideal co-founder will agree on most things (80%), but will disagree a bit and bring you a different perspective (20% of the time). The quantity of capital that may be obtained and the conditions on which it becomes available are both impacted by how much it adds to the startup’s value and can. Document repository with a powerful user permission engine. If a CEO does not exist at the time of company formation, keep some equity reserved for the role in the future. In this guide, we talk about the fundamentals of startup equity distribution: What is startup equity; Who gets equity in a startup; Factors to consider. It denotes 3 levels of company. To be sure, if you raise a priced round at a high valuation, the long-term difference in dilution between raising $250,000 through notes and, say, $750,000 won’t be much. Look, starting a new venture is hard, but having to figure out what is fair for each cofounder shouldn't be. A tool like this equity calculator can be a helpful way to take a more nuanced approach. It’s better to have more shares than you need, for the sake of future issuances or to maintain founder control. Summary. A great tool to evaluate the anticipated contributions of your founding team is the Co-founder Equity Calculator. 99% of you will need), you'll learn how to avoid this unfortunate, yet totally avoidable, situation. With each round of financing, where the startup gets more money from investors, the founders' ownership in the company shrinks. is a web app for seed-stage founders designing ESOPs (Employee Stock Ownership Plans). Have traction? This next set of calculators helps you determine the. As the driving force behind your venture, you're constantly juggling the desire for growth,your personal. As your company grows, and the chances of success and stability increases, then founders can increase their salary compensation over that period. This might mean personal savings, starting your. Note: the $5M max with audited financials for Reg CF did not get. The general requirement from the IRS is to follow the 60/40 rule, which states at least 60% of your compensation should be in the form of salary and up to 40% can be paid as dividends. 8. Average Startup CEO Salary in 2023. As your business grows, you may also decide to raise additional capital. prove capital for the company to be founded amounting to € 30. “Equity ownership is not only important for aligning incentives between founders and investors, but crucially it drives alignment across the entire organisation. All your staff go in the ESOP ledger. 6775, it is $0. You are given. A typical (minimum) vesting schedule for a founder is 48 months with one-year cliff, but vesting. Equity dilution and ownership target calculator for free. The dilution at series a is 20% and the esop is 10%. It’s hard to raise money. [startup] founder is, put simply, the. It is usually distributed by percentages of shares of stock in a company. You can write from 2 to 5 different co-founders. 0. The inventor who is recognized as the technology leader in his domain. Every company has different cash and talent requirements, which explains the large. Option #3. Research by SaaStr backs up this suggestion. Total taxes paid. Early Stage Advice: Founders often make mistakes when figuring out equity for each co-founder. How to Determine the Right Amount of Equity for a Startup Employee. The key difference is that SAFEs only allow for conversion into the next round of preferred stock issued by a company in the next priced equity round. The law mandating 409A valuations was. see all features Distribute equity to advisors, co-founders, and. Initial Grant. 6 million. Contribution = Standard; Stage = Startup; That would come out to . State Unemployment Tax - 2. Our equity split calculator makes it easy. Education;. Share dilution can change both your financial stake in the company and how much control you have. from the old $1. In the last step, the following formula is used to calculate the startup’s value. So what does the data. Advertisement Erin Nixon, VP of strategy at workplace mental health company Oliva, says that this was the go-to tool she used for working out her company’s option allocation. The company receives a new investment of $1,000,000. Revenue. 2% of the. Employers typically reserve 13% to 20% of equity for their employee option pool. Step 1 - Dividing equity within the organization. Calculating your equity stake is a crucial skill for any startup founder, as it can help you negotiate better terms and protect your interests. SeedCamp’s hackathon, Seedhack, took place at Google Campus, London, on the 8th to 10th of November. It's important for startup founders to know how much equity they are ready to give up. An option pool sets aside a chunk of equity for employees that helps evenly spread out the stock dilution of each shareholder’s ownership as the company grows. It represents a stake in the company's future success and potential financial gains. As a startup founder, keeping your company compliant is essential to protecting the value of your startup equity and reaping the rewards of your hard work. $200,000. In the Silicon Valley Startup Attorney article, “Founders & Startup 101: I) Forms of Equity”, Chris Barsness outlines the most important terms that founders need to know in the world of startup equity and vesting. Capbase lets you designate your board of directors, add and remove members, change their cash or equity compensation, and handle indemnification agreements. 6577 because of the full ratchet. See full list on embroker. To allow people to collaborate click the Share button (top right corner). FURTHER READING. Founders equity calculator. Founders need to be strategic on using people on your company’s advisory board, your reputation as a serial entrepreneur, previous work-history, I. In the world of startup funding, founders are always on the lookout for simple, fast, and creative ways to raise capital. Let’s assume that a company has a total of 10 million shares issued, and a founder holds 4 million shares while another holds 2. Please use the calculator at your own discretion and direct any questions or. Incorporate in Delaware, 2. Optimize Equity withTLDR Stock Options Tool". The equity split at 20% for the founders will typically be; 20-25% for the management team, 20% for the founders, and 55-60% for the investors (angel all the way to late stage VC). If you have more than one founder, you can choose how you want to share ownership: 50/50, 60/40, 40/40/20 ,etc. Revenue is the money that you generate through sales and is a measure of startup performance. But for different startup companies, this combination of 4 groups can have different categories. Bringing decades of experience from startup, scale up, legal, entrepreneurship and fortune 500, we're on a mission to empower founders and their teams, by making global equity simple and fast, so they can go build a better future for all of us. The situation is complicated by the fact that the founders, in addition to their cash investment, also need compensating for. Startup Equity for Advisors. Suppose a startup is raising $5 million in growth capital in an upcoming funding round. As you grow, equity is distributed among those who contributed to fund your startup, give you advise, or develop your product/service offerings. 1:46min. In the end, however, they don't have your back. In this article, we cover how you can determine which type of investment will meet your startup’s needs and help you gain access to funding. The calculator suggests an equity split determined by the anticipated effort-based. Y Combinator famously advocates for equal split, and others provide calculators to split the equity "fairly". How to calculate start-up equity? The start-ups need to decide how will the equity be divided among the different groups (co-founders. With the FAST agreement, founders and advisors can agree on how to work together, what to accomplish, and the right amount of equity compensation in a short and simple 5-pager. These include their level of. Examples are in there for demonstration purposes, create your own elements from scratch. Pitcherific: Pitcherific helps you create, train. A startup equity calculator can help you make equity projections and get a better understanding of your stock options. 25% equity stake. 1. g. For purposes of investing money into your own company, you can use the same financing vehicle. The calculator allows for up to five investors and two co-founders. The Startup Cost Calculator can help you get an estimate of your startup's total expenses. Spargo says the calculator is built to help founders “understand the impact that their salary has on the long term value of their equity” by using a graphical representation to show how paying. Last week, Grover had posted on X platform (formerly Twitter) about the. The company contribution is rarely exactly 50/50 and the equity split should be based on a variety of factors, including those discussed above. At the same time, it promises an investor the right to buy future equity when a valuation is made. Look, starting a new venture is hard, but having to figure out what is fair for each cofounder shouldn't be. Welcome to the Co-Founder Equity Calculator! It is based on almost 3 years of one-on-one discussions with entrepreneurs through the co-founders meetup and 10 editions of the silicon valley startup conference. The average founder/CEO holds roughly 14 percent equity at the company's IPO, while an outside CEO holds an average of 6 to 8 percent. Startup financial advisor David Ehrenberg suggests that 5 to 10 percent is a fair equity stake for CEOs who join the company later. We exist to help founders, so we run nearly 1000 free startup events per year where you can meet local entrepreneurs, network with investors, learn from advisors, and connect with co-founders. Screenshot from the Co-founder Equity Calculator. The founders startup calculator equity helps to calculate the value of your own founder equity split and help you allocate equity to all your founders, employees and partners. You can change any of the values below, and this will auto-update all other inputs. Founders: 20 to 30 percent divided among co-founders. The calculator can be used to. The typical triggers of a. Your startup is gaining pace, and you are bringing on an all-star staff and board of advisers to help you build it. The sweet spot is two co-founders at 36% of polling. Startup Founders Startup Operations. In exchange for their abilities and services, you would like to give them shares…What is common equity for startup? What is equity in a startup? Essentially, startup equity describes ownership of a company, typically expressed as a percentage of shares of stock. Enter your business's name and industry. • New business owners • Startup founders • Co-founders • Entrepreneurs So, you have a great business idea. The web app is based on Index’s analysis of seed-stage option grants, drawing on data from more than 1,000. $175,000. We compiled the largest ever set of benchmark data, comprising over 20,000 option grants from more than 1,650 startups across the US. The median level of founder ownership shown is 15% while the average is 20%. This calculator walks you through a variety of events that can affect the division of a startup's equity. For us, anything that has the word ‘simple’ is already winning! At Cake, it’s all about simple and fast. How to calculate return on equity (ROE): the full guide. Business loan. However, the median startup CEO pay increased from $140,000 to $145,000. 2. "How much. Liquidation preference is a critical aspect of startup financing that impacts both shareholders and founders. Simply enter your information into the fields below, and the calculator will do the rest. Making 83 (b) is a better option in this case. How can startup founders decide between using a Simple Agreement for Future Equity (SAFE or "SAFE note") or a convertible note to raise funds from angel investors and pre-seed / seed VCs?. Find a company that’s comparable to yours (e. The value of shares issued by a startup (or other company). $350,000. Previously Brad Feld has argued that a founder CEO will be in the 5-20% range, a founder CTO in the 2-10% range, other co-founders between 3-7% and non-founder. Startup Equity Calculator. Decide what their total compensation should be. Most commonly, startup advisors are paid with anywhere between 0. 0% CEO -Non-Founder 180k-260k 225k 0-150k 3-7% 5. Equity splits may be renegotiated down the line, especially at large stage funding events. Dividing equity within a startup company can be broken down into five simple steps: Divide equity within the organization. Exercising options early could also enable founders and early employees to become eligible for the Qualified Small Business Exemption. Startup Equity. • Startup founders • Co-founders • Entrepreneurs So, you have a great business idea. This is why equity dilution is sometimes called founder. . Co-founder equity split - (US) Startup Market Data 45%/55% :. Once a startup hits the $1 billion mark, it typically has more than 700 employees. Step 3—Dividing equity among Investors. Determine the gap between their salary and total compensation. It is for this reason that Y Combinator introduced SAFE notes in 2013,. calculator. 5% then diluted. Snapchat cofounders Evan. Your founders’ agreement will be unique to your business, but all founders’ agreements should cover some basics. In total, there are now 13,000 shares of company stock (on a fully diluted basis)—and just like that, you now own only 77% of your company (10,000/13,000) instead of 100%. The summary taxes cost is 10,35%, which depends on the employee salary: Social Security - 6,2% of salary. But the difference becomes more substantial if the valuation that you are able to raise at begins to rapidly decrease. An example timeframe for an equity vesting schedule is four years. Startup Equity Calculator. Self-Funding. Just keep in mind that this tool cannot be used independently, as the website also admits. e cost of a mobile application. 99% of you will need), you'll learn how to avoid this unfortunate, yet totally avoidable, situation. Inputs that go into this model. By taking this course and utilizing my easy-to-use Startup Equity Calculator (UPDATED to handle up to 7 cofounder slots–more than what 99. Input the last preferred price, post-money valuation, and/or total number of outstanding shares from the companies you want to compare. Here is a co-founder equity calculator that can help you through the process. You also give an investor 2,000 shares in return for some much-needed capital. It allows founders to structure the equity plan to meet their needs and provides incentives to employees that are appropriate for their contribution level. Source: The Founder Institute. Sideqik CEO & Founder. Use data to inform your decision making when creating equity offers for your team. 7% of salary. All the calculations that happen in the background are in this sheet. It involves a few key steps, which we will outline below:. e. Startup CEO Salary Calculator US Based Companies that have raised under $100MAfter you submit your 409A request with equity and questionnaire data, your valuation analyst will schedule a kickoff call to discuss valuation models. Explore. Calculator Founder Equity (Excel)Initially, the owner is generally shared in percentages between the startup's co- founders in most typical cases. 5 million in this case—the pre-money value plus the investment amount. • Startup founders • Co-founders • Entrepreneurs So, you have a great business idea. Sweat equity is a non-monetary contribution that the individuals or founders of a company make towards the company. With a 50-50 equity split, you and your partner must completely agree on important decisions about your. Get Started!Common equity allocation methods among co-founders include equal splits (such as 50-50, or 33-33-33), or a senior controlling partnership, where one founder has a larger stake (such as 60-40). e. You can also ask if they’ve dealt with personal or. At the beginning of a startup journey, founders own the full number of the startup's issued shares, with each. Follow these steps to calculate a baseline valuation figure: Calculate your revenue run rate (RRR), which is the most recent month’s sales times 12. So you end up with 80 shares for the technical co-founder and 105 shares for the CEO leading to a 43%/57% split in terms of equity. g. Industry leading data to motivate your team. Scenario 2: Investor Equity Stake. Most companies use. Print out your results and bring them to the next meeting for discussion. More on this below. Here are two additional articles that also provide good guidelines. If there are five co-founders, each co-founder receives 20% equity in the company. How much equity to give a tech cofounder (according to Founders Pie Calculator) Aspect. 45% of salary. Option pool: 20 percent, which can be divided up among employees. Let’s look at a hypothetical example. A resource for entrepreneurs and founders of startups in various stages of growth, WilmerHale Launch is your source for answers to the questions that impact you every day. For example, under a 4 year vest with a 1 year cliff – if the co-founder leaves or you fire them within the first. As investors seek to safeguard their investments and maximize returns, startups must navigate these preferences to secure funding while ensuring long-term growth. Then add up the numbers for each founder, sum those totals, and calculate the percentages. By taking this course and utilizing my easy-to-use Startup Equity Calculator (UPDATED to handle up to 7 cofounder slots–more than what 99. This cap table calculator for startup founders helps them understand how much equity they will own in their company under different circumstances. Want to know how you can split startup equity with the help of a startup equity calculator?Here, you would get a clear view of what type of data you need to. We agree to reduce our stakes to 40% each and contribute a total of 20% (10% from each of us) into the Founder Stock Pool. Learn more about getting an EIN for your startup. See the "Getting a Job at a Startup" chapter in Part III, Teams for more info. As you might expect, technical co-founder equity should be reasonably high since they share the responsibility of running the. Investor’s 20% is thus worth nothing. If there is one founder, she/he will own 100% of their company. vedant_ag. WilmerHale is providing direct access to a Co-Founder Equity Calculator, an online tool built and operated by a third party. [startup] founder is, put simply, the. Here we will make a scenario for a startup where the founder holds 100% ownership of the company and how it decreases with each and. Our startup equity calculator is designed to help quantify each of a startup’s co-founders’ contributions in order to more accurately split equity in the company so you can prevent disputes between team members and focus on what matters. One major complicating factor with granting equity in an LLC is that W-2 employees of an LLC cannot hold equity in. While some founders may decide to bootstrap their business, companies with high startup costs often rely on external capital to finance early-stage growth. 20 reviews 2,318 views | Start the discussion! | Bookmark download for free. " * * *. Another study by Kruze Consulting found that the average startup CEO salary was $146,000. So you divide the 20% by 1 minus the esop you need. How to value your startup – method #1: Decide how much money you want to raise. 50/50 or 20/20/60). Startup founders reduced their pay in 2023 to. Founder, C-level Employees, and Board member salaries. Current ownership. These are the kind of splits created by most cofounder equity calculators. Dividing Equity. Investors may appoint associates to help manage the business to safeguard their interests. Type any values/percentages into the inputs, and the outputs will update. The amount of technical co-founder startup equity you should give members of your team depends on a few key factors. When a startup raises a priced round in the future, SAFE holders' investments will convert into preferred shares using the valuation cap in the agreements to determine the price per share. As you progress beyond this stage, you will. For example, if a worker is worth CAD 10000, and the share price is worth CAD 5, then the sweat equity, she will receive is CAD 50000. In 2023, the average startup founder’s salary will be around $148,000 per year. Part 1. Although we find this tool to be of value to our clients, we do not sponsor its use or work directly with its developers. The simplest and quickest way to calculate startup equity is by having each founder get an equal share of the company. This way the investor ensures the best. So, if you add shares to your company through subsequent rounds of funding, if you want to maintain the relative value of your. Co-founder Equity Calculator helps co-founders split the baby. Fill in the co-founder names at the top. At a £2,000,000 valuation, Seed Legals found that the average founders’ salary was £25,000, rising to £52,000 and £80,000 at £4,000,000 and £6,000,000 respectively. Angel Investors: 20 to 30 percent. Check Out the Pie Slicer! Manage the contributions of your whole team using the online Pie Slicer software. Early Stage Advice: Founders often make mistakes when figuring out equity for each co-founder. In the Silicon Valley Startup Attorney article, “Founders & Startup 101: I) Forms of Equity”, Chris Barsness outlines the most important terms that founders need to know in the world of startup equity and vesting. 2. The founder equity split should be a considered, not hasty, decision. Issuing equity to founders and employees in an LLC can be very complex to navigate for a startup. The sheets in the cap table. However, for founders, there's a trade-off to consider. A general rule of thumb is to set aside around 10%-15% of your equity for your. Startup financial advisor David Ehrenberg suggests that 5 to 10 percent is a fair equity stake for CEOs who join the company later. If you want to give up less equity, you’ll need to reduce the amount of investment needed, or increase your valuation. Comparable Pricing Method. One key criteria for startup equity allocation is who had the original idea and developed the business plan (although the execution is arguably more important). Sweat equity is the term that’s used to describe any non-monetary contribution that a person or a company makes towards a business. 2%, Founder 3 16. 0% President / COO -Founder 100k-200k 175k 0-50k 3-8% 5. Airbnb is currently valued at $30 billion, as of August 2016, making Kutcher and Oseary’s shares currently worth an estimated $75 million, assuming no share. This calculator shows how to determine a founder's equity dilution after a single round of fundraising/capital increase. It is a crucial factor that determines the value, incentives, and control of the company. Download the Grunt Fund Calculator – Expanded to accommodate up to 20 Grunts! The video below provide a quick explanation on using the calculator. Allocate money to investors. A well-calculated valuation ensures that equity distribution is fair and aligns with the individual contributions of each stakeholder. Part 1. 5% equity. Summary. A cap table, or capitalization table, is effectively a snapshot in time that reveals who owns what in a company, and how big their slice of the cake is. If you need help valuing your company, we offer business valuation consulting services. The formula used to calculate the amount of equity a co-founder should receive is called the Founders Pie Calculator. All your common, seed, series-a cap tables are in this sheet. Equity capital is the capital/finance that a business raises from investors in exchange for equity or stock (in this context, equity capital can be an alternative to debt capital). Founders equity calculator. Startup equity. The ideal co-founder will agree on most things (80%), but will disagree a bit and bring you a different perspective (20% of the time). A simple agreement for future equity delays valuation of a company until it has more performance data on which to base a valuation. How to use the startup equity calculator. Note: Yellow highlighted cells are manual inputs/assumptions. How to distribute equity in your startup. Create a business plan for your startup. Startup Equity @ Early Stage Startups "Hey baby,. Thus, post-money valuation= $4,000,000 + $2,000,000 = $6,000,000. A cliff period means that during that period, no shares are owned by the person. Eqvista’s startup valuation calculator is a tool that helps you calculate the valuation of a startup within a matter of minutes. APPLY NOW. You grab your two best friends, get all excited, and then start a company together. 39% of business founders fund startups with personal funds. Here are the five steps to offering startup employee equity: 1. Some benchmark tools are: 1. Tech co-founder equity: Hiring a CTO is the right choice if you can afford tech salary and a fair amount of equity. To calculate the churn rate, divide the number of customers you lost last quarter by the. VC is the first Venture Capital firm to invest in early stage startups using founder friendly India SAFE Notes. Equity dilution is defined as the decrease in equity ownership for existing shareholders that occurs when a company issues new shares. A very close call if we put the cut-off at 50%. Realistic cost projections and using a startup cost calculator can help you determine the right amount of funding. You grab your two best friends, get all excited, and then start a company together. Fill in the number of options and strike. The founder equity split should be a considered, not hasty, decision. New Tax Law Improves Startup. Therefore, to protect yourself vs. Add your. In this case, the first founder would own 40% of the company, while the second would own 25% (2 million / 10 million x 100% and 1. Churn Rate: The rate at which a startup loses customers during the acquisition process. These include who is founding the company, what the company structure is, who. )Non-founding chief technology officers have a smaller equity stake in the startup, and would be more likely to negotiate for a salary closer to market levels. Co-founder Equity Split. Employees Carta’s Insights team deciphered the state of founder equity division by studying the data from 18,000 founders, across 8,000 startups actively using Carta software for their captables. This introduction of new shares decreases the founders’ ownership stakes from 100% (100 shares/100 total shares) to 66% (100 shares/150 total shares). The average founder/CEO holds roughly 14 percent equity at the company's IPO, while an outside CEO holds an average of 6 to 8 percent. Attorney Mary Russell counsels individuals on startup equity, including: Compensation Counsel on Job Offers. Legal Counsel on Job Offers. This amount is on top of the shares they are already awarding to co-founders. How to value your startup – method #2: Decide how much of the company to sell. The problem wasn’t the time(s) when I would be. How much do CEOs of startups make? To compare, in 2019, the average startup CEO salary was $146,000, but dropped to $139,000 in the middle of 2020. So, if your company is valued at £1M, and you want to raise £200K, you’ll need to offer 20% equity in your business. The startup equity Value Calculator is a valuable tool for startup founders and employees to calculate the value of their equity. On day one, founders own 100%. One drawback of an equal founder equity split is that it can impact decision-making and lead to stalemates if the partners don’t agree on something. No need to give up equity or pay interest; Forces founders to be creative and resourceful; Can slow down growth;. Examples are in there for demonstration purposes, create your own elements from scratch. 99% of you will need), you. This equity is determined by the investors and is considered the pre-money valuation. Studies show VCs prefer uneven splits, but startups still often split 50/50. Foley’s Startup Advisors answer questions that entrepreneurs need to know for their startup venture. You also give an investor 2,000 shares in return for some much-needed capital. Equity boundaries at different stages. Calculate Your Co-Founder Equity Split Check the boxes of each founder who contributed to the effort mentioned in each question. Use these resources to figure it out. Deciding how to fairly divide equity and ownership of a startup is important to both your co-founders and your business's future. “Par value” or “face value” is the lowest price for which a company can sell stock. com If you need to check how many shares each co-founder in your startup should get based on proven industry standards, use our startup equity calculator. Multiply each of the founder’s values by the factor’s value to calculate the scores. They decide how much equity they should own based on their roles and contributions to the company. Gust’s online tools support corporate legal and financial formation and operation for entrepreneurs, as well as deal flow and relationship management for investors, from startup through exit. Your startup has to get to about $10B valuation before you start making life changing money. This is the first time that we’ve seen the average and median not move together, reflecting a change in the distribution. What is the average dilution of a startup after funding rounds? The average dilution of a startup after funding rounds can range from 20% to 60%, depending on the number and size of rounds. Launch. As noted above, this model is intended more for educational purposes than for performing serious valuations. That said, it’s unlikely in most cases for non-founders to receive more than 5% of the business (bringing on a CTO can be the one common example of exceeding this mark). Down Round Protection. termination – Amicable departures are generally easier than terminations. After a year, a founder is entitled to 25% of their equity. Learn to use a simple framework and my robust calculator to help you and your cofounders to find a fair equity split. These shares will be distributed based on each founder's ownership percentage.