I'm working on a tech product. I have incorporated a delaware corporation 2 weeks back. I wanted to file trademarks and patents under my company name. So I incorporated little bit early. I'm planning to bring more people like CTO, CFO, Advisors, Investors etc on board after 6 months. What would be the fair percentage of shares I should issue myself?
When opening a new corp, it's a good idea to issue initial shares in large enough quantities which would allow you to offer them to other team members later on. I would suggest something along 1-10K. At this point you own 100% of shares.
Once you do decide to bring someone on-board, you may decide to offer them a certain stake in the company. You should always think of that in terms of how much would that equate in terms of actual money. Lets say you hire a COO and you agree that he/she would be interested in earning 150K annually. Since you currently can only offer 50K, you would offer the other 100K in equity. Now if you forecast your company to evaluate at 2M at some near future, then each share (assuming you issued 1000) would effectively be worth 1K, so to compensate someone with potential earning based on future valuation you may want to offer them 100 shares. This means that now you own only 90% of the company. Hope this gives you general idea.
Answered 8 years ago
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