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.
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