Startup Equity Distribution – an incremental approach

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Equity distribution in early-stage startups is a slightly odd subject. Obviously at this point the startup is worth nothing – or less-than-nothing, if expenses are being recorded as debts on the future company – and who wants to argue about percentage points of nothing? Sometimes the whole subject is just ignored.
On the other hand, whatever the addressable market size of the idea at hand, the spectre of founders squabbling over enormous wealth is lurking somewhere in the subconscious of everyone involved, so it is equally possible to go the other way, and invoke complex calculation methods of one kind or another, however irrationally over-fussy.
While complex approaches are arguably better than failing to address the issue at all, a simpler method is more typically adopted: if there are two founders at the beginning, they are usually assumed to have 50% each, if three, 33 1/3%, etc – as in this Seedcamp agreement template.
If they add additional co-founders, there is a re-distribution by agreement, such that the original co-founders see their percentage ownership reduced, to ‘make room’ for the new partner. The process is repeated each time a new equity-holder is added (ignoring such things as special share types – usually considered as over-complicated at early stages).

I consider that there are several problems with this:

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Project for a Progressive Ethics

ethicsdoodleI’ve been going to quite a few events recently which broadly come under the heading of futurism – indeed many of them have been through a reliably high quality meetup group actually called London Futurists.

These meetings deal with more-or-less mind-boggling speculations and predictions of things like robots taking all the jobs, artificial intelligences surpassing human capacities, people hacking their own or their children’s biology through genetic or prosthetic modifications, and similar subjects. Sci-fi stuff, you might think …

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Project Proposal: Co-Founder Jamming

It is a truth universally acknowledged, that a single startup wannabee, in possession of only some grand ideas and a sub-set of the necessary skills, must be in want of a co-founder.

(apologies … many and very humble apologies, indeed .. to Jane Austen).

As an aspiring startup founder, possessing only some of the skills needed to make any of my ideas fly, not even sure if one of my own ideas should be the first one I work on (see earlier post), I need to find a co-founder or two – or five.

How do I do this? Well, as far as I can see, I’m already going along the accepted pathway. Attending tech networking events, talking to people, putting myself about, writing to people, trying to be as noticeably helpful and interesting as is consistent with not seeming creepy. And it’s great – I am consistently impressed by how positive my experience at each event is, by how interesting/interested the people and their ideas are (posts passim).

But is it enough?

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First Project Proposal – Wikitect

OK, so the primary purpose of my venture into the world of tech is to become a part of it. I am confident of the skills, creativity and work ethic I have to offer, but somewhat short on substantive CV matter. In the long term, this blog will hopefully serve as some part of a distributed resume – an aspect of a career bootstrap process.

One plank of this will be to publish project proposals – ideas for ventures of various kinds, more or less deeply considered – to give a flavour of the way I think, the areas I’m interested in, the thought processes I use.

Going public with ideas is an interesting undertaking – taking us straight to the heart of one of the startup dilemmas – are our ideas so precious (my precious…) that we need to keep them secret until we can unveil them in glory (or at least as an MVP), or is the need to find collaborators, to develop traction, so important that it requires us to come out in the open?

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