Reddit reviews Slicing Pie: Fund Your Company Without Funds

Slicing Pie

Have a read, it's about a hundred pages and it will give you some good insight on this. I'll let others chime in from here.

I recommend reading http://www.amazon.com/Slicing-Pie-Company-Without-Funds-ebook/dp/B0096EFHBI

It advocates against fixed equity splits, rather allowing you to calculate a dynamic ratio of equity that should feel fair at all times.

I think it is key, especially if they are "great". It is actually in a company's best interest. The more vested a person is, the more likely they will work hard to create a great product. A salary isn't a great tool to get people to really commit. They get a salary whether the company succeeds or not.

I can't think of situation where you wouldn't want to give a great employee equity. It is just a bad business practice and shortsighted. That said, there is a great book called Slicing Pie: http://www.amazon.com/Slicing-Pie-Company-Without-Funds-ebook/dp/B0096EFHBI which details how allocate equity in super fair way without just "guessing" or using word of mouth estimates on industry standards. It is like vesting but without a predetermined allocation, which is hard to determine when a person just starts.

Static splitting of shares when nothing has been done by anyone is absolutely insane. I absolutely recommend reading Slicing Pie by Mike Moyer. It gives you a dynamic way to split shares within a startup company based around your actual measurable contribution to the project.

http://www.amazon.com/Slicing-Pie-Company-Without-Funds-ebook/dp/B0096EFHBI

I wouldn't try to value the company at this point. No track record of revenue or customer base makes it so subjective.

Recommend using an equity calculator like this:

http://foundrs.com

only as a starting point for discussion, then talk about likelihood of things that would change your situation.

From here:

• Set periodic time to review equity (e.g. every 3 months) and see if still valid.
  
• Put in Cliffing
  
• Put in Vesting
  
• Get this in writing (e.g. shareholder agreement) & signed by both of you
  
• talk to a local startup lawyer to vet the wonderful legal advice I'm giving you over the Internet
  
  While having it in writing is important. Remember a piece of paper is useless, unless you have inherent trust to begin with - think of it like pre-nuptial and how many of them actually hold up in court.
  
  For more detail, read:
  
  
• 18 mistakes that kill startups by PG
  
• Slicing Pie if you want a more comprehensive equity split model
  
  Let me know if any questions

D'oh! Was not 100% sober when writing that. Correction, the book is "Slicing Pie". Site, Equity Split Calculator, Amazon (not-affiliate).

The amazing book Slicing Pie outlines ways to deal with almost your exact situation in the fairest way possible. It's short, sweet, and I highly recommend it. It has ways to value everything you mentioned, including time invested, money invested, his ownership of the LLC, etc. Using their formulas, you can figure out fair ways to represent all that time and money in your equity splits.

Slicing pie

OP read this first

http://www.amazon.com/Slicing-Pie-Company-Without-Funds-ebook/dp/B0096EFHBI

This is a great process for dividing equity and a quick read: Slicing Pie

Hi. We're a company developing management systems for fraternities and sororities. We're looking for a developer proficient in PHP and JavaScript to join our team in exchange for equity (fairly).

The equity would be split in accordance with what I've learned from: Slicing Pie.

We are a team of two CEO's (one learning to code) and one developer right now.

Major, major plus if you were part of Greek Life.