Dividing start-up equity in an early-stage company can be difficult to figure out because dividing equity is usually based on what you think someone might deserve if they do what you think they might do. There are far too many variables to get the right number and changes in the company will force you and your co-founders to renegotiate equity.
There is an easier way to solve this problem. It’s called a dynamic equity split and it divides start-up equity based on what an individual actually contributes so there is no guesswork. The allocation changes over time, but at any given time all participants have exactly what they deserve. No more and no less.
Mike Moyer, author of Slicing Pie (www.SlicingPie.com) provides his thoughts on the perils of fixed splits and why all entrepreneurs should use a dynamic model in their start-up company.