SaaStr · 2015-08-19 · 3941d

Equity Distribution Strategy for Founder-Funded Startups

This article addresses how to fairly allocate equity when one founder conceives the idea and funds the startup alone. The recommended approach uses a two-bucket system: dividing founder stock among co-founders based on contribution fairness, then granting additional equity to the funding founder based on their cash investment using a pre-money valuation methodology.

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Metrics in this report

Calculated Equity Percentage from Example

17%

diluted basis

$100k investment into $500k pre-money valuation

Example Funding Founder Investment

100000$

illustrative

early stage startup example scenario

Example Pre-Money Valuation

500000$

illustrative

early stage startup example scenario

Funding Founder Additional Equity Range

10-20%

typical range

fully-diluted cap table for founder cash investment