
How is equity distributed in a startup? - jmtame

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mattculbreth
I suggest you read Paul's essay on this topic:

<http://www.paulgraham.com/startupfunding.html>

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jmtame
I'm not sure how equity works if I have a co-founder and I'm giving him "15%."
Is this in stock? Or is this annual revenues? Or am I the one who decides?
What's typical?

I'm not studying finance at college right now, so keep that in mind. Any sites
that might explain this would be helpful. Thanks

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jward
Equity is ownership of the company. It is everything that that the company is
after all debts have been settled. Stock is the way this is represented. So
the percent of equity you have is the percent of stock you have.

The only time it translates into money for you is when it is sold or dividends
are declared. Generally, the percent of the equity you have is the percent of
the cash you get.

I would recommend talking with your cofounders about how you want to split it
up. Remember that YC will take a small chunk of it as well. I'm sure if you're
accepted there will be help with understanding it all.

If you want a generic recommendation, take a chunk and set it aside then
divide the reset evenly amongst the cofounders.

