All About Equity

At the founding of the startup, the entrepreneur often has little idea about the distribution or the protection of the most valuable component of the startup; its equity. This chapter discusses the distribution of equity in case of a lead founder or several co-founders starting a startup. There are risks of a co-founder leaving the startup or leaving and joining a competing company. We discuss how to protect the equity from the departing founder and ensure fairness for those who stay to build future value of the company. The cornerstones of shareholder agreements that entrepreneurs are adversely impacted by and others that can benefit them during funding rounds are also discussed.