Hi,
we are a startup in the consulting space. We now think about the equity split. We are 3 people. 2 of them will contribute a signed contract, i.e. upcoming revenue. One of these two has a specific skill and network needed to start the consulting business. The second one has general experiences in the field and some network. The third person has a specific skill (similar to the first person) needed to start the consulting business.
I really like Mike Moyer's idea to split equity rather based on contribution and not on something fixed. I think it's fair. I'm now thinking how to evaluate the individual contribution. I think, in our case, contributions are salary risk/time spent, capital investment, specific skill and initial sales/revenue.
I'm wondering now how to evaluate the sales. When founding the company 2 persons will contribute a signed contract. My idea was to use the revenue of the contract as input. Do you agree?
What should actually be considered for the equity split? In my opinion only the contracts from the beginning should count. Any additional sales after founding would be part of running the company and not an external contribution. For example, a founder contributes 10 computers at the beginning which needs to be considered as contribution. During time the company produces 5 more computers. However, this is part of company's production and employees/founders are paid by the company to do this.
What is your opinion on this? How would you evaluate contributions for a consulting startup?
I'm looking forward to your ideas.
we are a startup in the consulting space. We now think about the equity split. We are 3 people. 2 of them will contribute a signed contract, i.e. upcoming revenue. One of these two has a specific skill and network needed to start the consulting business. The second one has general experiences in the field and some network. The third person has a specific skill (similar to the first person) needed to start the consulting business.
I really like Mike Moyer's idea to split equity rather based on contribution and not on something fixed. I think it's fair. I'm now thinking how to evaluate the individual contribution. I think, in our case, contributions are salary risk/time spent, capital investment, specific skill and initial sales/revenue.
I'm wondering now how to evaluate the sales. When founding the company 2 persons will contribute a signed contract. My idea was to use the revenue of the contract as input. Do you agree?
What should actually be considered for the equity split? In my opinion only the contracts from the beginning should count. Any additional sales after founding would be part of running the company and not an external contribution. For example, a founder contributes 10 computers at the beginning which needs to be considered as contribution. During time the company produces 5 more computers. However, this is part of company's production and employees/founders are paid by the company to do this.
What is your opinion on this? How would you evaluate contributions for a consulting startup?
I'm looking forward to your ideas.
Dislike ads? Remove them and support the forum:
Subscribe to Fastlane Insiders.
