Make all of the equity vested and dilutable. This means that equity is given to the founders over time based on their contribution to business goals and that 1% today could be .8% tomorrow when you get the $1 mil is seed investments.
Typically, you should start with the founding members getting no more than .5% in the beginning and over time (3-4 years) getting 15-40% of the company a piece depending on how many founders you have. The total amount of of vested equity should be equal to about 60-80% of the business so that you can retain control of the company as the equity dilutes and so you can provide incentives (equity and options incentives) to employees you’re going to recruit to your startup over time. Sound complicated? It is… And we’ll deal with the details in upcoming blog posts.
Additionally, these best practices are attractive to angel and ventrue capital investors. Currently, we’re working on the appropriate structure for our hackathon winner Miss Nev, as we turn it into a company. I’ll update you soon on how everything pans out as we deal with developing the shareholder’s agreement and filing our 87B for a Delaware C-corp,