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 are not generous enough with employee equity, and you should demand fair treatment in terms of compensation.

In early-stage startups, technical employees may find themselves doing the work of a co-founder while receiving only 1% or less equity, which is not a fair arrangement.

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.

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

Equity represents ownership in a startup, indicating what percentage of the company a founder, employee, or investor owns, and it's crucial to understand whether you're receiving stock options or direct equity.

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

Founders should be generous with equity for early employees, as they are the ones who build the company over time.

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