Comments on: Dividing equity between founders

By: Joseph Turian

Joseph Turian — Wed, 02 Dec 2009 08:39:37 +0000

Why is it called a non-convertible loan if it is intended to convert into equity?

Question two:
If one were to hire a salesperson and offer them 10% commission, and were to offer them payment using the non-convertible loan strategy, would it offer the salesperson a perverse disincentive to keep the valuation low? Or is the valuation essentially proportional to the salesperson’s revenue? Would the salesperson benefit from pressuring the founders towards taking investment prematurely?

i.e. in what circumstances are the salesperson’s interests not aligned with the founders’?

I am curious to understand what does and does not align interests of people working for the company at an early stage.

By: New Enterprise Forum: Term Sheets | Ann Arbor Startup Blog

New Enterprise Forum: Term Sheets | Ann Arbor Startup Blog — Fri, 16 Oct 2009 02:51:30 +0000

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links for 2009-09-15 « Blarney Fellow — Wed, 16 Sep 2009 01:07:49 +0000

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Dividing equity between founders | Igniting Startups - nPost — Mon, 31 Aug 2009 15:25:39 +0000

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By: startupbug.com

startupbug.com — Fri, 28 Aug 2009 08:21:08 +0000

Dividing equity between founders…

Obviously the main consideration should be the relative importance of each founder to the future prospects of the venture. And, as in any negotiation, the alternatives each person has will also factor in….

By: Philip Baddeley

Philip Baddeley — Tue, 25 Aug 2009 22:32:59 +0000

Great posts. We came up with the Equity Splitter, see Equity Fingerprint website, to provide a tool to help founders split the equity. It is simple and perhaps does not take into account enough of future scenarios. So important to have good leaver/bad leaver provisions as you say. Your stress on looking to the future says it all. Thanks for great posts

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Mon, 24 Aug 2009 22:24:01 +0000

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By: Roger

Roger — Mon, 24 Aug 2009 16:35:50 +0000

Interesting article. I agree with most of the points mentioned in the article. The one point that seems unfair is to create a loan for the one founder that put in seed money. Loan’s are usually secured by hard assets and putting money in at a start-up is a high-risk, high-reward game. For a seed money at a 5% interest loan, it’s still very high risk but the reward is just not there. If I were the “no cash” co-founder, I would take that deal all day long.

By: Umair Mufti

Umair Mufti — Mon, 24 Aug 2009 03:32:56 +0000

i think himanshu meant: http://www.andrew.cmu.edu/user/fd0n/35%20Founders%27%20Pie%20Calculator.htm

By: himanshu baweja

himanshu baweja — Sun, 23 Aug 2009 17:19:17 +0000

The approach we guys used is the founder’s pie calculator by CMU prof.

http://www.andrew.cmu.edu/user/fd0n/35%20Founders‘%20Pie%20Calculator.htm

Its a more a analytical approach and makes you think about all the different factors and their relative importance.