VW Blog

Grant Your Equity Wisely

By Kevin Vela

Which conversation would you rather have?

“So…that 10% equity we gave you last year – yeah, I’m gonna need half of that back,” or “Thanks so much for everything you’ve been doing for the company; here’s another 3% equity!”

As you can probably imagine, the first conversation usually doesn’t go well. But it’s entirely avoidable.

A common form of currency for startups is equity. Most startups are cash strapped but loaded with equity. As a result, it’s typical for a startup to grant equity in lieu of cash payments to advisors, contractors, and co-founders.

When you do this,

And if you’re not sure how much equity to grant, start with less. It’s always easier to grant more equity; but it’s nearly impossible to take it back.

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Posted in Funding & Capital Raising, If I Were Starting A Business
Kevin Vela
Kevin Vela is the managing partner at Vela Wood. He focuses his practice in the areas of M&A, venture financing, fund representation, and gaming law. You can see Kevin's attorney profile here.