If we have proof of concept, early adopters, partnerships in place and a solid business model, isn't it feasible to start talking about equity?

We did a startup weekend and actually have paying customers ready to go as soon as we finish our app. I believe we need to talk about how the equity should be structured at this point, because we are all equally responsible for creating the idea and business model together. I believe an equal split is feasible with vesting terms attached to it!


I'd say you're *almost* ready to talk about equity but before you do, I think it's really important to check in as a group and see who really wants "in." Startup Weekends create a lot of enthusiasm and excitement but I've seen a lot of projects originate there that end up like reality TV - a contestant drops out or is voted off the island each week.

If you're really passionate about the idea and want to run with this, checking-in with each contributor and checking their level of passion is important before talking equity. Even though a vesting agreement can generally help eliminate dead equity, it still can leave significant equity in the wrong hands.

You're better off trying to shake anyone who isn't fully committed and waiting until you have a really strong sense of who really wants to roll-up their sleeves.

The best calculator (or guide to calculating equity) is here: and I'd caution in any scenario against equal splits. The bottom-line is that startups can't be run by consensus. It is best run by a single founder or a really well-established duo of co-founders and then "key hires" making inputs into one or two decision-makers.

Happy to talk this through with you in a call. In 15-30 minutes, we can walk through how to identify real commitment, what do do with people who are "waffling", how to compensate fairly and reasonably and what to do next.

Answered 11 years ago

I would say yes. If you've got an MVP and interest from paying customers, you guys need to protect yourselves.

Answered 11 years ago

Most startups will raise a $300K Convertible Note first and then close in a $1M Series Seed Round. The Convertible Note is usually raised in an Advisory Round where a few investors engage, advise on the investment strategy, and help you close the round.

Before you try and close the $1M Series Seed Equity Round, you will want to have your core team built, your product at Product/Market Fit, and your conversion funnel optimized (sales funnel if you are using direct sales).

Answered 11 years ago

Unlock Startups Unlimited

Access 20,000+ Startup Experts, 650+ masterclass videos, 1,000+ in-depth guides, and all the software tools you need to launch and grow quickly.

Already a member? Sign in

Copyright © 2024 LLC. All rights reserved.