Equity allocation should follow the following three principles:
1. Quantify the contribution and clarify the responsibilities and rights of partners. In the process of joint venture by partners, everyone often plays a very different but very important role for the company. Due to the different nature of capital, venue, technology, public facilities, market and sales channels, it seems difficult to compare each contribution equally. Therefore, how to distribute the equity among founders often becomes a difficult problem, and even has to pat the head to decide the equity. This often lays a "dark mine" for startups, which will break out from time to time in the most difficult times.
Entrepreneurship does not happen overnight. In the process of starting a business, each partner should constantly provide resources and capabilities for the startup company to escort its growth. Therefore, the distribution of rights and interests also needs to be aimed at the partners who can make long-term contributions to the startup company. The partner's equity can be gradually distributed according to the year, project progress or financing progress to avoid the occurrence of short-term phenomena and ensure the unified and stable development of the company's business philosophy.
2. Leave room for investors to enter, and ensure that the control right of the company will not fall during the financing process. Investors will pay attention to the rationality of ownership structure in the investment process. In the future listing process, the capital market also requires a clear and reasonable ownership structure, because in each round of investors' entry, entrepreneurial teams need to think ahead, make overall plans, and constantly adjust to leave room for the future. At the same time, the dilution of equity brought by multiple rounds of investors' entry will lead to the risk of the company's control right falling, especially when there are different voices within the entrepreneurial team, investors will often become the "last straw to crush the camel."
China's company law requires the same shares and the same rights, and the design of the two-tier ownership structure cannot be realized legally. However, there are various ways to keep the founding team in control of the company. For example, China's company law allows the company's articles of association to make special provisions on voting rights (limited liability companies), allows shareholders to entrust voting rights to other shareholders (joint stock limited companies), and allows some people to perform company affairs (limited partnerships). Therefore, although it is troublesome, it can also allow the founder to control the company with a minority stake.
3. Leave room for the company's equity incentives. Entrepreneurship is like a long marathon. It's hard to get results without ten or eight years. At the same time, entrepreneurship is like a relay race. It needs fresh blood to generate waves of motivation and talents from all regions and industries, and constantly create new value for the company. So it can be said that starting a business is to run a relay marathon with a speed of 100 meters. The earliest entrepreneurial team started a competition, but how big the company can be, the people behind it need to take over the baton to ensure that the company will not vomit blood in the marathon or even be eliminated directly.
Therefore, as a start-up, it is always necessary to set aside a part of the equity pool to attract regional talents and industry talents to join. This long-term, institutionalized incentive can also ensure that there will be no problems in the running-in of new and old teams. Otherwise, the first batch of people who enter the company regard themselves as elders and worry that new people will take their place. Newcomers think they are more capable, and when they see that their elders want to enjoy the shares, the two sides have a strong rejection, so the sprint marathon of the startup will never reach the end.
The above is the answer given by the experts of the stock network according to your question, hoping to help you. Jinggu Com, an entrepreneur's equity portal with equity as its core content.