The 5 Golden Rules of Issuing Your Startup’s Shares
Stop giving away company shares like candy on Halloween.
Besides picking a company name, distributing shares is commonly an early task that most teams must do. It’s a tricky conversation that many first-time entrepreneurs tend to avoid, or worse, just split equally (continue reading to learn why). The conversation is especially uncomfortable because the project hasn’t started yet, and everyone wants to remain cordial. Adding this talk about ownership into the mix can change the atmosphere. Though, the fact is that the conversation is important because it brings you back to the reality of running a startup, where you have a long road ahead of making tough decisions.
This one is your first test. It’s an easy test because there is a right way and wrong way to do it. If you do it the wrong way, the bad news is that it will cause you lots of problems in the future that won’t be so easily resolved and may even require costly lawyers.
Fortunately, following these five rules will set you on the path to issuing shares the right way. By having this talk with your founding team early, bringing a plan to the table, and explaining why that plan is in the best interest of the company, you will steer the conversation in a way that doesn’t just make sense for everyone listening but…
