How To Hang On To Maximum Equity In Your Startup
Equity is often handed out like play money. Then it becomes valuable and the knives come out.
I get the same panicked email about once a month, without fail.
A founder writes in all freaked out because someone is now holding on to way more equity than they deserve. It could be a cofounder, an early investor, or even a rank-and-file early employee.
The question to me is always: How do I claw that equity back?
And the answer I give is always: You don’t. Not without a fight.
Let’s avoid this scenario altogether, and talk about properly valuing your stake in your startup.
First rule: Equity value means nothing until the startup exits
The dividing line between a successful startup exit and an unsuccessful exit comes down to the value of the equity you’re holding onto at the end, not at the beginning.
Some of my more successful startup exits, financially speaking anyway, were actually on the smaller side in terms of the sale price of the company. This was because I owned much more of the company when it sold. In one case, I owned 100 percent.
