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So, let’s say that one founder puts in $100,000 in seedcapital, that could be worth 20 percent of a seed stage company’s valuation. The calculation comes as follows: original 50/50 diluted down 20 percent to 40/40 for the financing, and then the one funding founder gets that 20 percent.
Finance Friday’s gets off the ground with today’s post by introducing you to an imaginary startup, the entrepreneurs that we’ll being following throughout the series, and their first challenges: splitting up the founders’ equity and addressing the case where one of the founders provides the initial seedcapital for the business.
For more on what I’m seeking, see The 8 characteristics of the perfect startup team and Early Teams: The Impact of Team Demography on VC Financing and Going Public. We agree on an equity split, vesting, and initial compensation structure. Once we’ve executed all the steps above, we go to VCs and raise seedcapital of $1-2m.
For more on what I’m seeking, see The 8 characteristics of the perfect startup team ; Early Teams: The Impact of Team Demography on VC Financing and Going Public ; New Report Identifies Key Characteristics Of Successful Startup Entrepreneurs. We agree on an equity split, vesting, and initial compensation structure. Sounds great!
Other sources of capital. If you believe in it – then finance whatever you can yourself. We are raising seedcapital, but would like to have a US tech investor. All that being said, all equity allocation (giving) should be done with a 4 year vesting, 1 year cliff. Government grants – Credit cards / debt.
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