Frequently Asked Questions

Establishing Ownership

As a sole founder, how many shares should I issue myself?

Most sole founders will typically issue themselves 4 to 5 million shares. This allows the founder to issue a sizable stock grant to themselves while the stock is at its lowest (par) value. Also, issuing this amount of stock leaves room for granting shares to potential future cofounders without having to make an adjustment to the Certificate of Incorporation.

How many shares should I set aside for a future co-founder?

Based on a typical startup stock allocation, if a sole founder issues 4 to 5 million shares to themselves, that would leave 3 to 4 million shares unissued and available for future co-founders. The future co-founders will typically receive smaller initial grants to reflect the previous sole founder’s substantial early contributions to the company.

When and why should I determine an initial equity split with my founding team?

Investors expect the founding team to decide on a fair equity split early on. The inability to come to an agreement signals to investors that there could be potential future conflict amongst the team. Alternatively, having this conversation early demonstrates cohesion among the founding team.

How much equity should I set aside for future employees, contractors, advisors, and others?

What are the consequences of not issuing any shares?

Can I adjust the number of shares I've issued later?

What are some tax considerations startups should make when issuing their initial equity?

What is vesting? Can I backdate a vesting schedule?