Last month, we developed a construct of Non-Resident Fellows [NRF] at the Tekedia Institute. These are subject matter experts who can offer directions to Tekedia Mini-MBA community. Because of the depth required, the individual must have worked for at least 7 years and possess a minimum of bachelor’s degree. As questions come to us, the support team processes them and decides who will deal with them.
Question from our community (edited): “For a start up setting up a team, how will the company share equity…Will it be hours contributed, financial commitment by the team or shared equally among the team or founders?”
Response from NRF which works in a VC (edited) : “A good plan is to have a Founders Agreement which articulates what each member should do and what happens should one leaves the firm. On the equity distribution, since most founders are working full time in the business, the hours are eliminated as a factor. So, what remains is the cash injection. If one is injecting cash to bootstrap the business, he/she can get more shares. But if there is no money coming from anyone or if the money contributed is equal, then shares have to be equal.
“Sometimes, you may also consider who has the most important skill to help that business. For example, if you are building an AI startup and one, say, worked in a Google AI unit, and he/she knows the job well, the equal shares may not be smart. If you are three and only he/she is a technical mind, you may decide to award him more shares because without him/her, there is no company. Also, if your business is in contracting and one person has good networks, you may decide to favour that person on equity as he/she can change the fortune of the firm. Put all in a Founders Agreement explaining how shares move if anyone stops delivering value as expected.”