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by enjo 5950 days ago
The issue being actually accomplishing #3. As a founder I can't afford to give you a huge chunk of the company (lets say 10% all by yourself). So I give you and the other 4 employees each 5%. That is going to be diluted down to god knows how little by series C. Probably something in the range of 0.5%-1% in a lot of cases. Now your screwed either way.

The simple fact is, when investors are involved there is NEVER enough equity to go around.
2 comments
dustingetz 5942 days ago
"In the general case, if n is the fraction of the company you're giving up, the deal is a good one if it makes the company worth more than 1/(1 - n)." http://www.paulgraham.com/equity.html

you took money because it made your smaller % worth more. so why are we even talking about %s?

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mattiss 5949 days ago
5% is still pretty good. The fact is most people offer .1% -> 1%, which is practically worthless after dilution.
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