Founder Shares
Equity ownership allocated to the founding team members of a startup company.
Definition
Founder shares represent the equity ownership that founding team members receive for their role in creating and building the company. These shares typically come with vesting schedules and may be subject to various restrictions and rights.
Key Considerations for Founder Shares
Equity Split
How ownership is divided among founders
Vesting Schedule
Timeline for earning full ownership rights
Cliff Period
Minimum time before any shares vest
Acceleration Triggers
Events that speed up vesting
Common Equity Split Approaches
- Equal Split: All founders receive equal ownership percentages
- Contribution-Based: Based on time, money, or expertise contributed
- Role-Based: CEO gets larger share, other roles proportional
- Dynamic Split: Equity adjusts based on ongoing contributions
- Sweat Equity: Shares allocated based on work performed
Real-World Example
Google: Founder share structure
Larry Page and Sergey Brin initially split equity equally, with both maintaining significant ownership through IPO despite multiple funding rounds and employee equity grants.