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Welcome to Phase Four of a four-part Splitting Equity Series. If you missed it, start your journey here: Introduction - Early Startup Equity — Getting it Right before continuing on if you haven’t already, and go in order from there.

Phase One - Startup Equity - Avoiding Early Mistakes

Phase Two - How Startup Equity Works

Phase Three - How to Split Equity

Phase Four - Part 1 - Equity Management

• Part 2 - Recovering Startup Equity ( ←YOU ARE HERE 😀)

Let's do this!

When it comes to startup equity distribution, giving away a startup's equity is easy. How much equity do we get back? Well, that's a different story altogether!

An "equity clawback" is designed for early-stage startups to essentially reverse an equity grant based on a number of provisions...

We can't win every battle, so sometimes we just need to live to fight another day.

I learned this lesson early in my startup career (the 90s), at a time when everything was going "up and to the right" for absolutely everyone. During the boom times, our biggest problems are staffing up, raising capital, customer acquisition, and scale.

And then one day they go the other direction. The markets dry up, "How fast can we staff up?" is replaced with "How do we make payroll?" and suddenly we're talking survival versus strategy.

When Survival IS the Strategy

We don't talk much about "survival" as a startup strategy, partially because it's not fun to talk about, and partially because we hope never to think about it. But lo and behold, if we plan o...

Welcome to Phase Four of a four-part Splitting Equity Series. If you missed it, start your journey here: Introduction - Early Startup Equity — Getting it Right before continuing on if you haven’t already, and go in order from there.

Phase One - Startup Equity - Avoiding Early Mistakes

Phase Two - How Startup Equity Works

Phase Three - How to Split Equity

Phase Four - Part 1 - Equity Management ( ←YOU ARE HERE 😀)

• Part 2 - Recovering Startup Equity

Let's continue!

Splitting startup equity is only half the challenge for early-stage startups — managing startup equity is a whole different issue! How much equity we split and the founders' ownership percentage is generally determined by what we expect each founder to contribute.

But the problem is once ...

Welcome to Phase Two of a four-part Splitting Equity Series. If you missed it, start your journey here: Introduction - Early Startup Equity — Getting it Right before continuing on if you haven’t already, and go in order from there.

Phase One - Startup Equity - Avoiding Early Mistakes

Phase Two - Part 1 - How Startup Equity Works

• Part 2 - Startup Stock Options

• Part 3 - Startup Stock Vesting

• Part 4 - Startup Stock Valuation ( ←YOU ARE HERE 😀)

Phase Three - How to Split Equity

Phase Four - Equity Management

Let's continue!

Early-stage startups use a Stock Valuation to determine their fair market value. This will determine everything from how much a venture capital firm might receive for their investment to how we distribute employee stock options.

T...

Welcome to Phase Two of a four-part Splitting Equity Series. If you missed it, start your journey here: Introduction - Early Startup Equity — Getting it Right before continuing on if you haven’t already, and go in order from there.

Phase One - Startup Equity - Avoiding Early Mistakes

Phase Two - Part 1 - How Startup Equity Works

• Part 2 - Startup Stock Options

• Part 3 - Startup Stock Vesting ( ←YOU ARE HERE 😀)

• Part 4 - Startup Stock Valuation

Phase Three - How to Split Equity

Phase Four - Equity Management

Let's continue!

Vesting is a way to allow members to "earn" their stock over some period of time or per specific milestones. A common "4-year vesting schedule" means that a member of the company will earn 25% of their stock or stock options per y...

Welcome to Phase Two of a four-part Splitting Equity Series. If you missed it, start your journey here: Introduction - Early Startup Equity — Getting it Right before continuing on if you haven’t already, and go in order from there.

Phase One - Startup Equity - Avoiding Early Mistakes

Phase Two - Part 1 - How Startup Equity Works

• Part 2 - Startup Stock Options ( ←YOU ARE HERE 😀)

• Part 3 -Startup Stock Vesting

• Part 4 -Startup Stock Valuation

Phase Three - How to Split Equity

Phase Four - Equity Management

Let's continue!

Startup stock options provide the holder the option to buy a company's stock at a later date, typically during a "liquidity event" where the company is sold or goes public. Early-stage startups use a stock option agreement to provide...

Welcome to Phase Two of a four-part Splitting Equity Series. If you missed it, start your journey here: Introduction - Early Startup Equity — Getting it Right before continuing on if you haven’t already, and go in order from there.

Phase One - Startup Equity - Avoiding Early Mistakes

Phase Two - Part 1 - How Startup Equity Works ( ←YOU ARE HERE 😀)

• Part 2 - Startup Stock Options

• Part 3 -Startup Stock Vesting

Phase Three - How to Split Equity

Phase Four - Equity Management

Let's continue!

Startup companies have been wrestling with how to structure stock ownership forever. As private companies we have major decisions to make, from raising venture capital to awarding key employees with equity to just splitting equity among co-founders — we need a stru...

Welcome to Phase Three of a four-part Splitting Equity Series. If you missed it, start your journey here: Introduction - Early Startup Equity — Getting it Right before continuing on if you haven’t already, and go in order from there.

Phase One - Startup Equity - Avoiding Early Mistakes

Phase Two - How Startup Equity Works

Phase Three - Part 1 - How to Split Equity

• Part 2 - Splitting Equity Today

• Part 3 - Splitting Equity in the Future ( ←YOU ARE HERE 😀)

• Part 4 - Calculating Startup Equity Splits + FAQ

Phase Four - Equity Management

Let's continue!

Founder equity splits rarely turn out to be what we hoped they would be after Year 1. The co-founders at startup companies start off with the best intentions, but as the business venture turns into lon...

If I hadn't been a Founder, I'd be an awful parent.

Now, I'm already giving myself too much credit here because it's assuming I'm not an awful parent, which let's be honest, many of us just might be. But I've definitely come to appreciate over the years raising my 5-year-old son and 10-year-old daughter how my best parenting traits are directly mapped back to what I've learned as a Founder.

Surprisingly, it really has little to do with "building a startup" and more to do with how I've come to think like a Founder.

The Power to Question Me

The day my son Wil was born, I wrote him a long letter. In it, I gave him all of the advice I had in me about preparing him for the world. The one piece that's always resonated the most was "Question every...

Welcome to Phase Three of a four-part Splitting Equity Series. If you missed it, start your journey here: Introduction - Early Startup Equity — Getting it Right before continuing on if you haven’t already, and go in order from there.

Phase One - Startup Equity - Avoiding Early Mistakes

Phase Two - How Startup Equity Works

Phase Three - Part 1 - How to Split Equity ( ←YOU ARE HERE 😀)

• Part 2 - Splitting Equity Today

• Part 3 - Splitting Equity in the Future

• Part 4 - Calculating Startup Equity Splits + FAQ

Phase Four - Equity Management

Let's continue!

By default, most startup founders just split their equity once and live with it. They may decide on an equal split or they may devise some reasons why the split favors one partner more than another. But ...