Before distributing equity, consider how many people you need to hire and how much equity you plan to allocate for their compensation. The first employee at a traditional Silicon Valley startup typically receives between one and two percent equity.

Most startups fail, and only a small percentage achieve significant financial success, so view equity as a tool to enhance your chances of success rather than a fixed resource to be divided.

When determining equity distribution, consider how much cash you have on hand, as cash is often scarce when starting a startup.

When deciding on equity, start with a 50-50 split, as both co-founders are likely to contribute equally at the beginning stages of the startup.

In a startup with multiple founders, equity allocation should ideally be equal to avoid potential conflicts and ensure trust among the team.

Startups typically allocate between 10% and 20% of their equity for employee incentives, and venture capitalists often require this equity pool to be established before investing.

Dynamic equity agreements can be confusing and demotivating; founders are more motivated when they know exactly what equity they have from the start.

You should be generous with equity to founders and early employees to foster a sense of ownership and commitment.

Equity should vest over time, meaning co-founders earn their shares gradually, and cliffs ensure they must stay for a minimum period to receive any equity.