How the founders should share

I. Valuing the founders ' contributions

Founder Partnership Venture, some provide funds, some provide venues, some provide technical capacity, some provide sales channels, and some provide financing resources. Each founder offers different contributions, and each contribution is of a different nature and seems utterly incapable of comparison. Without a clear standard, it is hard to say that research and development is more important than sales, and it is hard to say that the job of pulling investment is more important than the contribution of the Office. So how to allocate equity between the founders, often become a problem, often have to use the "head" method to divide the proportion. This often leads to a feeling of discontent and bursts at the hardest of startups.

Is there a way to quantify the founders ' contributions in the same dimension? If you can quantify the different contributions of the founders by a single unit of calculation, the founder's equity may be slightly more scientific and objective, at least to make everyone more convincing and more cohesive.

In slicing Pie:fund Your company without Target, Mike Moyer first proposed that the founders ' contribution to the venture project be valued at market value, and then the total value of all founders ' contributions will be calculated, The ratio of the founders ' contributions to the total valuation is the proportion of the shares that the founders should hold.

The founder of the company's investment, the company should be given a reasonable return, if the company did not give enough return, then the given, but did not give the part of the founder to stay in the company's value, is the founder of the company's "input", or "investment." For example, the founder in accordance with the market, wages should be 20,000 per month, when starting a business only to get 5000 of the basic living expenses, then there are 10,005 is he deserved, but the company did not pay, this part of the relative so his net investment, is his company's "investment." His equity in the company can be calculated by referring to his "investment" as a proportion of the total "investment". This method of calculation can be called valuation, that is, according to the founder of the "market value" to assess the proportion of equity. The valuation method in this paper, based on the method of Mike Moyer, is slightly adjusted and supplemented.

II. valuation of various input elements

According to the valuation method, in order to distribute the equity among the founders, the founders should first convert the value of the founder to the venture capital, add up the value of the total input, and then convert each person's input value to the proportion of the total value. For example, I invested in the research and development work, valued at 200,000, I invested in the value of 100,000, the total value of everyone's investment 1 million, my contribution is 30%, so my equity ratio is 30%. Therefore, the most important part of this method is to estimate the value of various inputs.

1. Working hours

Working time Investment, is the founder of the company's most important contribution. How is the value of the founder's time input calculated? The most reasonable way to do this is to follow the usual wage standards in the talent market. For example, in his education and professional background, in a similar position, usually the other companies will pay the amount of wages, this salary, is his time price.

On the one hand, if a start-up gives him such a wage, then he has nothing to do with the start-up business, but a hired laborer. This kind of person, is not the founder, also is not in the business, just is working. On the other hand, if a start-up gives him a stake that is not worth his salary in other companies, he probably will not choose to start a business and is more likely to choose to work for another company. He chooses to start a business, must be the equity he thinks he gets, and the potential value is greater than the salary he is working for another company.

In particular, the founder in the entrepreneurial work, if the market is a monthly income of 20,000, he does not take a penny wages, then to help the start-up enterprises to save 20,000 of the wage costs, or the entrepreneurial enterprise to earn a value of 20,000 of human investment. This 20,000 is the value of his human contribution to the enterprise. Accordingly, if he had received a monthly salary of 5000 yuan, his contribution would be only 10,005. To put it simply, the salary of a start-up enterprise "should have been sent to him, but not sent to him" as his input.

If he is a part-time business, according to the part-time staff of the market wage, the conversion of his input. If he usually works on a monthly basis, he can also convert his monthly salary into daily wage and hourly wage, and translate his input into the actual working days and hours.

2. Cash

Usually, the value of cash is the amount of cash. Cash is a very important part of the start-up enterprise. After the company grows and the future is clear, many investors are willing to invest in the company because there are more alternative sources of financing, so the importance of capital is actually reduced. But in the "start-up phase", companies are uncertain, and not too many people are willing to invest in the company, at this time to cash the role of the company will be of great significance. Cash, in general, estimates the value by its actual amount.

3. Physical assets

The founder's offer of physical assets to an enterprise can often be considered a cash investment. Because physical cash is actually purchased, it is another form of cash. However, such physical assets must meet at least one of the following conditions:

(1) is the core assets of the main business of the enterprise. For example, a start-up project is an Internet project that rents Web servers for a project. However, if it is convenient to hot meals in the office at noon and a microwave from home, the microwave oven is not a necessary core asset. The reason is that, at the start-up stage, any asset is based on the principle of "entrepreneurship is very needed".

(2) is specially made for the business of the start-up enterprise. For instance, the computer, desk, office supplies and so on that is bought specially for the start-up business. If it is conveniently from the home junk heap lightly from the old computer, redundant stationery, it is not specifically for the start-up enterprises to buy.

So how is the price of physical assets calculated? Although professional evaluators usually have a mature method of calculation, in order to be easy to consider, the entrepreneur can be a simple translation of their own. For example: Usually, if the physical assets are brand new, or if they are bought in real assets for a short period of time and have little or no depreciation, they can be calculated at the purchase price; If the physical assets have been depreciated very badly, they can be calculated at the current price that can be sold, such as a reference to the price of 58

4. Office Space

The founders may offer offices, warehouses, shops, and other venues for start-up businesses to operate. If startups are in dire need of these venues and founders don't offer them, startups will have to rent them themselves. So in this case, the founder of the site provided to the start-up, in effect, is to provide enterprises with the equivalent of rent money. Therefore, the start-up enterprises should give, but did not give the rent, is the founder of the venture capital investment.

Of course, not all venues can be converted to the value of the company, and some venues can not be used for valuation:

(1) Beyond the needs of the site, the company has no value. For example, the company only has 5 people, only 30 square meters of office, the founder provided 500 square meters. That extra 470 square meters will have no value for the company.

(2) The founders were not able to profit from the site, the founder provided to the company. If the site had not been used by the founders for business activities and had not been able to bring cash benefits to the founders, the site could not be translated into value. Because the founders offered it to startups, it didn't hurt the founders ' interests.

5. Entrepreneurial ideas

It's just an entrepreneurial idea, a preliminary idea, and the entrepreneurial idea itself is basically worthless. However, if the founder of the start-up project before the start, the founders have a complete thinking of the entrepreneurial idea, conducted a series of trial and error, formed a mature business plan, or has begun a preliminary attempt to develop a preliminary technical solutions, and even the original product. Such a mature entrepreneurial planning can be seen as a valuable contribution to the company.

From entrepreneurial ideas to mature entrepreneurial planning, before the start of the start-up, the founder has been silently dedicated to a lot of upfront work. Usually in the market, for these upfront work will pay how much wages, this salary is his investment in start-up enterprises.

6. Proprietary technology/intellectual property/Products

The founder's investment in the company is the market value of the proprietary technology/intellectual property that the founders provide to the start-up enterprise. If the founders are unwilling to turn intellectual property into startups and only want to authorize startups to use them, then the royalties are also the value of the Founders ' contribution to the company. The value of the licensing of intellectual property can be calculated in accordance with the licensing fee of the enterprise "should be paid but not paid".

In some cases, the founder will be his development or operation of similar products, into a start-up enterprise, as his contribution, such as has developed the Web site, APP, SNS account number. The usual transfer price of this product can be used as the founder of this contribution to the valuation. A lot of webmaster platform, webmaster QQ Group, there are trading sites and account transactions, from there can understand the basic market price.

7. Network resources (sales, financing, etc.)

Sometimes companies need certain connections, and some founders can provide that. For example, companies need to use connections to help companies cash out, or to build important partnerships, or to help companies raise money.

If you can help the company to bring sales revenue, the company can pay sales commission according to the market, if not paid, you can in accordance with the "should pay, but not paid" sales commission amount, the conversion of the founder of this network value to the company. Accordingly, if the founder's ability is to be able to help the company to finance, then the company should be in accordance with the financial adviser's Market price commission, can also be in accordance with the enterprise "should pay, but not paid" commission amount, the company's contribution to the value of the network. Of course, startups can also measure whether they are willing to pay directly, to save equity, or to convert stakes and save money.

8. Other Resources

If the founders or other friends of the founders are able to provide important short-term resources for the company, the company can pay them or owe them. But if startups cannot afford to pay, and these people demand equity, then they can translate the value of their contribution into the market value of these resources.

Of course, these resources should not be idle, it is also useful to the resource providers, because the provision to the start-up enterprise, causing him to not use. For example, can own pull truck, peacetime also in pull, because provides to the entrepreneurial enterprise use, oneself cannot take to pull, such resources may change the equity. If the original is their own idle vehicles, usually do not have how to use, then provided to the entrepreneurial enterprises occasionally use, so the equity is not reasonable.

In short, the founder of any resources, as long as the start-up enterprise is very much needed, but the company can not afford to pay, or cannot pay the full amount, should pay, but did not pay the part, is the value of these contributions, is the investment in the company.

Third, the calculation of the proportion of equity

1. Calculation formula of equity proportion

After determining how the various input elements are valued, it is easy to calculate the equity of each partner. By adding up the valuation of the various elements that a founder contributes, and dividing it by the sum of the various elements of the founders ' contribution, you can calculate the percentage of a founder's contribution, the percentage of which the founder should share. To put it simply, the formula is: "A founder's input valuation, the total Founder's input value = The proportion of a founder's equity."

2. Valuation fluctuations in input elements

Sometimes, all kinds of input elements, the urgency of the initial stage of entrepreneurship, scarcity is not the same, the most urgent, most scarce elements, can be discussed in proportion, appropriate amplification of its valuation.

For example, for most entrepreneurs, money is probably the most important thing in the beginning. If you need to contribute, out of time, not to work their own, working longer hours, but also how much can be required to do the work; But for money, there is no way out of it. So, for the vast majority of startups, the initial possibility of money is the most important factor. Therefore, when valuing the value of money, it is not necessarily valued at the actual amount of money, but it can be magnified, for example, by twice times the amount.

The timing of the calculation of equity proportion

The elements, such as funds and facilities, that the founder invests in the company may be put into the company at the time of the establishment. But the most important input factor-time, is the founders in the entrepreneurial process, through their own practical work, gradually into the start-up enterprise. Therefore, the founder of the company's investment and equity ratio, it is likely to be in dynamic change. How can this problem be solved?

1. Estimation method

The simplest approach is to anticipate and determine the respective proportion of the founders ' future investments and their value in advance of start-up.

For example, one of the Entrepreneurial projects: (1) A three-person business, party A is responsible for leading the start-up enterprise, and is responsible for the work of the main business, C money; (2) The first year, a B and C are not paid; (3) If the talent market hires a person of such qualifications, engages in a job in a start-up enterprise, Should pay a annual salary is 420,000; (4) Similarly, party B in the talent market this position should be 180,000, (5) A and B are not money, C can provide 200,000 yuan. Because of the lack of money for entrepreneurial projects, we agree that the capital of C is valued at twice times, that is, 400,000 yuan. In summary, the investment value of a 420,000, B's input valuation 180,000, the input value of C 400,000, combined with the total value of the input of the third party of the three parties to the estimate of 1 million, so the proportion of the third party B C of the equity ratio of 42%, 18%, 40%.

2. Periodic Evaluation Act

There is also a way of regularly summarizing the contributions of the founders, calculating the founders ' inputs and their valuations up to a certain point in time, and then calculating the ratio of their inputs to the total valuation, thus determining the equity ratio. By doing so, the equity ratio will be dynamic.

For example: (1) A B-C three-person entrepreneurship, party A to contribute to and lead the start-up enterprises, b output and mainly responsible for transactional work, C money, (2) A provisional no wages, (3) If the talent market to hire a person of such qualifications, engaged in a start-up business position, should pay a salary is 420,000, That is to say, a monthly salary of 35,000; (4) Similarly, party B in the talent market this position should be 180,000, that is, 15,000 of the monthly salary, (5) A B are not to pay, C commitment can provide 200,000 yuan, because the start-up project is very short of money, C, the value of twice

The end of the first month, respectively, the calculation of the input of the third party C: A worked all month, wages should be 35,000, the start-up enterprise did not pay him this salary, so a investment is 35,000; b also worked all month, Wages should be 15,000, the same venture did not pay him this salary, so the investment of B is 15,000; entrepreneurial projects to buy cloud servers, domain names and pay advertising Federation costs, c party actually spent 20,000, twice times the value is 40,000. At the end of the first month, the investment of a is 35,000, the investment of B is 15,000, the input of C is 40,000, the total value of the input of the third party is 90,000; Therefore, at this time, the proportion of the third party is 38.9%, 16.7%, 44.4% respectively.

Similarly, each month at the end of the time, you can calculate the total number of inputs and their proportions. Of course, according to the needs of the start-up enterprise, you can schedule the calculation cycle, such as weekly calculation, or a quarterly calculation. In this way, as the respective input changes, the proportion of equity will change.

However, with the gradual accumulation of investment valuations, in the end, each month's investment is likely to not bring about greater change in equity ratios. For example, in the first month, the total value of each party input is only 90,000 yuan, party a 35,000 of the month, can bring him 38.9% of the shares; If by the end of the 11th month, the investment has reached a cumulative value of 990,000, even if the other people do not contribute to the 12th month, Only a 35,000, so that he can only at the end of the 12th month, an increase of 3.4% of the shares, calculated formula 35,000 (990,000 + 35,000) =3.4%. Therefore, the future, the founders continue to invest, the proportion of the impact on the smaller, that is, at a certain time, the proportion of equity is relatively stable, at this time, basically do not have to periodically evaluate and calculate the proportion of equity, you can directly determine a relatively accurate proportion of equity.

It should be noted that if the start-up is ready to raise money, then the equity ratio needs to be clear. Otherwise, letting investors see the uncertain, dynamically changing ownership structure among founders will make investors think the team is unstable and unwilling to invest.