Founder's Equity
What is Founder’s Equity?
Founder’s equity refers to the ownership stake held by the founders of a startup. This equity represents the founders’ share in the company and their claim to future profits or exit proceeds. As the company raises external funding, the founder’s equity may be diluted, but it remains a critical component of ownership and control.
Managing Founder’s Equity
- Equity Split: Founders often negotiate how to divide equity among themselves based on contributions and roles.
- Vesting Schedules: Equity may be subject to vesting, where founders earn their shares over time.
- Equity Dilution: As the company raises funds, the founders’ percentage ownership may decrease.