Equity: Dividing the Pie
FinLender advice setting up or making changes to business capitalization structure, and hiring advisors may seem like a big expense for your business, but setting up your business incorrectly will cost you more in the long run.
One of the most significant reasons why it’s crucial to agree on the division of equity between founders is so that you have a solid base when it comes to awarding equity to third-party investors. At each round of funding, from seed financing through to Series A, B, and C equity rounds, you need to identify how much equity you are willing to sell. Investors then put money into your business in return for an equity stake. Again, the amount of equity each investor receives should represent how much they have put in.