How To Distribute Startup Equity (The Smart Way) | Dan Martell

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Having issues deciding how to split up the equity in your business between your team (co-founder), advisors and potential investors? In this video, I provide some guidelines and some major DON’TS when thinking about startup equity.

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Okay.

Due to popular demand, I’ve decided to finally tackle the billion dollar beast.

And while it’s not easy to have a conversation about startup equity without putting the faint of heart to sleep, it’s territory that simply can’t be overlooked.

Because for any growth-oriented entrepreneur entertaining the idea of handing out equity in their company, the math absolutely matters…

And one small misstep can be the difference between accelerated growth or the speed pass to startup hell.

So if you’ve ever wondered what a healthy equity breakdown looks like for all key stakeholders (founders, advisors, investors and team members)…

… then give this new video a quick spin.

As you can see, used appropriately, equity can be an amazing way to incentivize team members and attract key advisors and investors.

Like I did with Uber’s Travis Kalanick

But if you don’t enter the conversation with clear knowledge of the right benchmarks to shoot for…

… then you’re setting yourself up to either give too much away or lose talent and investors to other startups playing a much sharper numbers game.

So get your numbers right.

Make the right offers.

And then step up to the plate and use equity for the growth accelerant it is.

To splitting the pie…

(and watching it grow),

– Dan

Don’t forget to share this entrepreneurial advice with your friends, so they can learn too: https://youtu.be/hWA1b8owinc

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ABOUT DAN MARTELL
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“You can only keep what you give away.” That’s the mantra that’s shaped Dan Martell from a struggling 20-something business owner in the Canadian Maritimes (which is waaay out east) to a successful startup founder who’s raised more than $3 million in venture funding and exited not one… not two… but three tech businesses: Clarity.fm, Spheric and Flowtown.

You can only keep what you give away. That philosophy has led Dan to invest in 33+ early stage startups such as Udemy, Intercom, Unbounce and Foodspotting. It’s also helped him shape the future of Hootsuite as an advisor to the social media tour de force.

An activator, a tech geek, an adrenaline junkie and, yes, a romantic (ask his wife Renee), Dan has recently turned his attention to teaching startups a fundamental, little-discussed lesson that directly impacts their growth: how to scale. You’ll find not only incredible insights in every moment of every talk Dan gives – but also highly actionable takeaways that will propel your business forward. Because Dan gives freely of all that he knows. After all, you can only keep what you give away.

Get free training videos, invites to private events, and cutting edge business strategies:
http://www.danmartell.com/newsletter

Comments

sahil shah says:

Can you please make a video on , How to approach investors for fundraising..??

Mercury Rhodes says:

THANK YOU SO MUCH MAN THIS IS EXACTLY WHAT I WAS LOOKING FOR
Since im here if your interested in working with a start up luxury corporate housing company let’s talk. just pm me

Abbi Rose Kelly says:

Thank you so much for all your great information! I’m so thankful for you! Have you ever seen this book? If so what is your opinion? http://www.slicingpie.com Slicing Pie is a universal, one-size-fits all model that creates a perfectly fair equity split in an early-stage, bootstrapped start-up company.

Olabode Ajetunmobi says:

how do we dilute the equity

Jim Khan says:

Excellent……. This tool may help you equity calculation https://www.youtube.com/watch?v=nN3yvuRCS8Q

Darshan Suthar says:

Let say if investor A came and he invested with 25% of equity. Btu what if investor B will be in interested? What would be an option to give equity to the next investor ?

Rajani Mathews says:

This was exactly what I was looking for. Thanks, Dan for this video. Very helpful.

Dmitriy Solodukha says:

Great video. But look. When you raising funds you are not usually giving a shares to the investors. The company issues new shares. Each round dilutes others. Is it ok when advisors’ shares got diluted from… let’s say 2% to 0.2% ?

tech__blogger__entrepreneur says:

Hi, Im starting up a business . one of the cofunder wanna become investor and doesnt wanna involve daily operating . does he need to shareholders' agreement with us or we have to sign the shareholders agreement and incorporate the company then ask him to put in the money into company ?

Mosh Media Inc. says:

I'm the lone founder of a prelaunch beverage company. My company has not yet raised seed funding. I have a celebrity musician who is interested in helping me get product to market, should I consider offering contribution equity to him for initial funding?…if so any advice on how much?

prasad kulkarni says:

Hi Dan, amazingly simple explanation. Its very helpful. I have been offered a Partnership in existing business due to my industry expertise and network. I may get a fixed salary for existing business and profit share in the new business firm will generate. There are other new Partners also joining on the same terms. I fear that only one of existing Partner and me is likely to bring in new business, other new Partners may just execute the work. Whether its a good idea to negotiate the profit sharing ratio based on the revenue each Partner brings in for 70% of profits? And balance 30% profit to be distributed equally as kind of variable salary for all partners?

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