What does that actually mean in terms of ownership? Startup equity incentive plans typically allow for grants of both flavors, with the specific situation determining which one is used. .

Startup Equity Calculator

You should also ask a few standard questions to make sure you are getting a fair equity grant that represents your potential contribution to the company.

Read about our equity split methodology

Getting a job offer can be both exciting and stressful. Carta Securities LLC is a broker-dealer and a member of FINRA and SIPC.

Jenna is on the content team at Carta.

This publication is not a substitute for such professional advice or services nor should it be used as a basis for any decision or action that may affect your business or interests. Stay up to date with monthly blog highlights, Introducing Carta’s SAFE and convertible note calculator.

How many years of company revenue projections do you have?

In the video below you can see the difference in the ownership distribution that “small” words can make. when calculating this percentage—not just what’s left in the option pool. Input the company's projected annual revenue. Contact: eShares, Inc. DBA Carta, Inc., 195 Page Mill Road, Suite 101, Palo Alto, CA 94306. your shares will actually amount to anything, 5 questions you should ask before accepting a startup job offer, What I wish I’d known about equity before joining a unicorn, 30 questions to ask before joining a startup, 5 expert tips on getting through a valuations audit, How Xenon Partners keeps startups’ doors open, How to convert your company from an LLC to a C-corp. How do I teach my employees about equity?

This free tool (based on Gust data) will help you ask the right questions to determine how much value each founder will contribute,

Even if you’re satisfied with the company’s equity offer, it doesn’t hurt to ask for more. If the company intends to remain private for a while, ask if they will hold tender offers (opportunities for shareholders to sell shares of equity).

Before signing on the dotted line, make sure you understand the basics of equity (like what vesting, cliffs, and strike price mean) so you can evaluate your offer. Finally, after you have the information you need, do some basic calculations to understand how much your equity could potentially be worth if the company succeeds (don’t worry, we have a calculator for that).

Then, a Series A investor offers you a pre-money valuation of 10m, with a 2m investment, and demands you create a 10% employee pool before the capital injection. Startup Equity Calculator Tool: Check out EZ Numbers (made just for startups), it will really help you calculate your startup equity structure based on revenue, expenses, and automatically calculate taxes/insurance/benefits that you’ll need to plan for. This communication is not intended as a recommendation, offer or solicitation for the purchase or sale of any security. Ask how many fully diluted outstanding shares there are and do the math to determine your percent ownership: Or, determine the projected notional value of your option grant: Tip: Ask if your vesting schedule is the same as what others get in the company.

However, some dilution should be accounted for, as it is likely that additional shares will be issued in the future to new investors. This communication is for informational purposes only, and contains general information only. Equity plans on autopilot, with document signing batch processing for any number of employee grants and an engaging employee dashboard. Bonus points if they continually reevaluate their process to make sure it’s fair. Startup Investment Return Calculator Get started. That’s money or options you wouldn’t have otherwise—all for asking a simple question. The later stage the company, the more built out the system should be.

How to negotiate your equity offer .

Options are typically used to grant equity to people who are not founders or investors, and come in two forms that relate to their tax treatment: Incentive (Qualified) Stock Options, or ISOs, and Non-qualified Stock Options, NSOs or NQSOs.

Neither eShares, Inc. DBA Carta, Inc. nor any of its affiliates will be liable for any damages, including without limitation direct, indirect, special, punitive or consequential damages, caused in any way or arising from the use of the services or reliance upon the information provided in this communication or in connection with any failure of performance, error, omission, interruption, defect, delay in operation or transmission, computer virus or line or system failure.

If the company is unwilling to budge on your equity offer and you feel it is too low, ask whether they offer equity refresh grants after a certain amount of time or in certain situations, like if you get a promotion. DOWNLOAD. Here are some dos and don’ts to keep in mind: While the three questions we covered earlier can help you understand the basics of your offer, the answers to these questions below will help you dig into the details: DISCLOSURE: This communication is on behalf of eShares Inc., d/b/a Carta Inc. (“Carta”).

Deciding how to fairly divide equity and ownership of a startup is important to both your co-founders and your business's future. Will you, as a founder, get diluted more than you anticipated?

Try to calculate the difference if the Seed investor’s 500k was actually a convertible note with a 8m cap.

and give you a sensible, objective recommendation for a fair equity split.

3 years 4 years 5 years. The best way to compare offers is to look at the percent of ownership you’re being granted. Make sure the company includes all outstanding shares (including preferred stock, restricted stock, etc.) In other words, will you be able to sell shares before an exit (like an IPO)? By clicking the Get Started button above you agree to Gust's Terms of Service

Note: approach this topic delicately.

With this tool, you get to see the real life consequences of investment terms before you sign the term sheet. And if the company offers equity (as they should), it further complicates things—companies don’t always give you all the information you need to calculate how much your shares could be worth.

. Otherwise, your actual percentage could be smaller than what they say, and you might not be comparing offers apples to apples if two different methodologies are used. Our free equity calculator can help you understand the potential financial outcome of your offer.

Once you have all the necessary numbers, it’s much easier to compare multiple offers (or compare your new job offer to your current equity package). Today. Let us know if you find this tool useful or if we can improve the experience in any way! eShares, Inc. DBA Carta, Inc. is a transfer agent registered with the U.S. Securities and Exchange Commission. Even if you’re satisfied with the company’s equity offer, it doesn’t hurt to ask for more. Want to know how it works? At least 3 years required. Plus you can look like a pro startup with fancy reports for investors What is Startup Equity?

You may have noticed that there is another toggle that determines who is diluted if there are convertible notes involved.

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Easily calculate co-founder equity split based on data from thousands of companies, for free.