How entrepreneurial teams distribute shares

In entrepreneurial teams (this Article refers to a small team of 2-10 people), the ownership of the joint-stock system is usually adopted. How to allocate shares to members is a very important and important issue. If a Member's shares are too low, his initiative cannot be fully realized; if a Member's shares are too high, the price will be too high if he makes a mistake. In fact, all questions about the distribution of benefits and voting rights are a big problem for small teams.

Recently, an Internet project was launched to organize a team of four people. I have some thoughts on the issue of equity allocation. The following is a brief introduction.

Let's talk about what shares mean.

From the ownership point of view, the shares you hold represent all the amount of your team's assets, which can usually be traded.

From the perspective of voting rights, shares represent the weight of your speech.

From the perspective of result, that is, interest distribution, shares represent the amount of dividends you receive.

The purpose of assigning shares to team members is to hard associate the interests of members with those of the team, so as to stimulate the initiative of each member and encourage members to consider the long-term interests of the team, this maximizes the long-term interests of each member.

The distribution of shares should achieve the above purpose as far as possible.

Therefore, in the sense of shares, the basic principle of share allocation is: the higher your investment in assets (assets include not only physical assets and funds, but also invested "soft capital ", that is, labor. This is often referred to as capital shares and technology shares.) Your shares should be higher. The deeper you have an understanding of the industry, the more you can take the team in the right direction, the heavier you speak, the higher your shares.

The basic principles of equity allocation are discussed above.

This article assumes that the direction is set by a senior developer (temporarily replaced by a CEO, usually the initiator) in the industry and can basically grasp the market trend.

Based on the insights of other Members in the industry, there are two situations.

1. Other members do not know much about the industry status

In this case, the CEO accounts for more than 50% of the shares. Because everyone should follow the people who can lead the team successfully.

2. Other members have a deep understanding of the industry's development.

In this case, the CEO's personal ability is relatively weak, so it is necessary to emphasize that many people vote to make decisions. That is to say, the majority shareholder's shares should not exceed half.

There is one situation where the CEO has not invested much in assets, but wants to gain a high share in order to hold the company, and has received a considerable dividend. This is unfair to most small teams.

One solution is to cut off the relationship between voting right and equity, so that the relationship between voting right and equity is no longer. For example, you can set the right to vote: the right to vote is set to, and the right to vote ratio of other Members is modified.

Another case is that the CEO has invested a lot of capital, and other Members have invested less. For example, CEOs account for 80% and other members account for 20%. In the long run, it is likely to reduce the initiative of other members.

One solution is to develop an equity incentive plan. The essence of the equity incentive operation is to issue shares, so as to reduce the CEO's equity and increase the equity of other members. For example, the Team initially assigned ceo80 % of the shares, and then set assessment indicators for each member. When a member reaches his/her metrics, the team assigned him shares, options, and so on.

In fact, I think that as a small entrepreneurial team, especially small, flexible, and flexible, there is no need to stick to orthodox principles on the equity issue. For example, we can discard the term equity and use ownership, voting rights, and dividend right to crack down precisely. Take our team as an example:

A: The initiator is responsible for front-end and back-end development of the website and has a deep understanding of the product.

B: Android client development, General Product Knowledge

C: Java client development, General Product Knowledge

D: Investment and assistant, general understanding of Products

 

Member	Ownership	Voting Right	Dividend right
A	60%	70%	60%
B	15%	10%	15%
C	10%	10%	10%
D	15%	10%	15%

 

After a team member has a deeper understanding of products and industries, or has made major changes such as capital injection, they can re-discuss and allocate the aforementioned rights.

The last thing to note is that the game rules must be clearly printed, one by one, so that the future may hurt the anger and centripetal force.

I hope this article will serve as an example for entrepreneurs and prospective entrepreneurs. We also welcome your feedback and discussion.