Startups Stack Exchange Archive

% Share for first employees

• posted by: Lamar on 2017-09-16
• tagged: equity, employee-compensation, shares
• score: 1

Every situation that I’ve read on “how to share equity/stock to first employees in a startup” has some type of capital (money) raised.

Say that there is no capital (so salary in this case is out of the question, since there is no money raised, it means that they are working for free), Say that the founder found some way to bring them aboard. These people are working part-time.

How much equity should they get in this case where they are taking some risks but not as much as the Founder?

I’ve seen some model where 15% in the company shares is dedicated to give its current employees and also the future ones (excluding CEO or temporary employees such as counselors etc.). So here out of 15%, how much these first non-salary group gets? (future employees will have a low risk since they’ll have a salary )

When it comes to calculate the % of shares that these already on board employees: (some of these point below are taking from the Grunt Equity Model)

• these shares should be vested
• should be based on the amount of present work + future value that these employees will bring to the startup

Answer 13355

• posted by: Denis de Bernardy on 2017-09-17
• score: 4

My question what if you don’t have capital (salary is out of the question, since there is no money raised), they are working for free ?

Then they are a founder, no ifs or buts. If you don’t want a cofounder, launch it yourself and earn enough to pay an employee. If you cannot, then either find investors or a cofounder.

Related:

• https://startups.stackexchange.com/questions/5582/how-to-distribute-ownership-fairly-amongst-founders/5583#5583 (and employees)
• https://startups.stackexchange.com/questions/7772/how-much-is-an-idea-worth

Answer 13384

• posted by: h22 on 2017-09-25
• score: 0

From how I have seen, the history of shares is

• People who work for free in your startup, supporting themselves by other jobs, are co-founders. If you you set a rule to give just a few percent to them, they chat pleasantly with you but just do not work.
• Next generation may have salary already, but this is under-market salary in an unstable company. Due this, they still get shares (while less) and, if possible, higher positions.
• Following generation receives the salary matching the market. They may be allowed to buy some shares but this is already optional.

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