

Dividing equity - rjett

A couple friends and I have just started to move past the ideas stage of our start-up and are getting to the point where we are trying to allocate ownership in the company. At this point in time, valuing our company seems quite arbitrary, but this is the ownership structure we have discussed:
                  Founder 1: 20%
                  Founder 2: 20%
                  Founder 3: 20%
                  Investor 1: $5000 for 2.5%
                  Investor 2: $10,000 for 5%
                  Remaining 32.5% : Options pool
This gives our start-up an initial valuation of $200,000. Is this number too high, too low, or about right?
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pg
The option pool is on the large side. The valuation is low unless the
investors are supplying more than money.

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rjett
My investors are only giving me money. From your comment, it sounds like I
should give the investors less ownership and the founders more ownership so
that the valuation is higher and the options pool is smaller. That being said,
what is a rough estimate of how big my valuation should be and how small/large
my options pool should be? I know this process is important, but at this
stage, it seems rather arbitrary. Any advice is welcome!

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pg
200k is low as seed valuations go, but it's impossible to say what yours
should be without knowing the startup. Option pools are ordinarily around 20%.

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danielha
That options pool is ridiculously huge.

