Questions

What is the fair % to give to a new CTO/web developer entering in the company after 2 years the company has been incorporated (no revenue) ?

2answers

To answer this question, I would need to know a lot more (how many other founders, employees, background of the CTO, etc.).

A great resource for thinking through founder equity is this post by Joel Spolsky.

http://answers.onstartups.com/questions/6949/forming-a-new-software-startup-how-do-i-allocate-ownership-fairly/23326#23326


Answered 6 years ago

It depends. The length of time a company has been incorporated has very little to do with the value or contribution to value creation. If there has been a third-party valuation event, things change. But if you're still slogging away and this person is a key hire to moving to the next stage, it's probably more.

Back in 2009 I wrote about the compensation for founders versus early employees http://startupnorth.ca/2009/09/10/founders-versus-early-employees/ and http://thinkspace.com/how-to-divide-equity-to-startup-founders-advisors-and-employees/ are great sources.

Both of these articles include distributions of bringing on talent post Series A (raised from an institutional investor). If you've raised this capital, you should be thinking 0.5%-1.5% for a senior developer. If you haven't, it might be higher like 10-15% or more, i.e., are they really a cofounder...

"Equity is like shit. If you pile it up in one place it just smells bad. If you spread it around then lots of good things grow." - @joshbaer
https://twitter.com/joshuabaer/status/360034185156640770


Answered 6 years ago

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