We typically have a few standard metrics we use to run through how much a share is worth:
- Idea: 3% - 5% - Ideas these days are cheap, everyone is having them it's execution that counts.
- Technical: 15%-35% - all developers (including myself) think it's worth more but if you don't have the rest in place then it's just a cool thing that sits on the shelf being worthless to everyone. That said, you want the developers to have a good stake in the product so they are suitably focused in the end result.
- Marketing / Sales: 15% - 30% - This is pretty important, if nobody knows about you, you're nowhere ... but put KPIs against it - X new customers / sales in a timeframe.
- Business: 20% - 30% - The leadership and vision, this is typically one or two people and they will make or break the company on its own, set the direction.
- Finance: the remainder, depending how much they put up, others adjust accordingly.
- Employee shares is the outlier here, for key staff you want to reward them ... either they get split under each of the headings above and are a part of those shares or they are a seperate block ... around 10-15% is reasonable to balance incentive against dilution.
A few notes about these splits
- Again for all of them it is to be qualified ... everyone should have a 1-2 year "buy-in" period where they have to perform at their role in order to receive the shares ... it's only by everyone pulling together that you will get anywhere.
- To start with 1 person may wear several hats, thus have more shares.
- Really these are pure guideline or a starting point for negotiation. At the second round fund raising, these all get diluted by the new party coming in.
These are just one set of possible guidelines, has anyone got another way to split up the inital plan?