<aside> 💡 This page is summarizing the rough plan of the equity program for the employees, founders, investors and advisors.
</aside>
Equity is a mechanism of motivation and compensation at early company stages when risks are high and cash is low as well as attracting and retaining professional talent at later company phases. Making everyone owning the company is part of our company values - Team effort and Gather value.
If you leave, you lose options. Company can print more shares, mostly for new investors.
Options are virtual and are not affecting the legal body of Gratheon OÜ registry as mentioned in Legal training by Hedman, mostly because its hard to alter real shares in the registry.
Options are given out (vested) in portions over (typically) 5 years
Options are not shares. Its a right to buy shares at fixed (low) price. Typically at exit events they are converted to cash.
Equity is thus very much trust-based. Company is interested in its employees owning the company.
ChatGPT, what is equity?
Approximate expected distribution of shares over time.
For team option pool and founders, we will have 1 year cliff, 4 years of vesting time.
| Who | angel phase ⛳ | pre-seed | seed | series A |
|---|---|---|---|---|
| Founder | 60% (600 000) | 54.3% | 41% | |
| Team option pool | 38% (380 000) | 34.3% | 26% | |
| Investors | 2% (2 000) | +20% (200 000) | +10% (110 000) | +20% (242 000) |
| Advisors | ||||
| (~0.1-1% per person) | 5% (50 000) | |||
| Capital to raise in convertible loan | 40k | |||
| in convertible notes | 1M | |||
| 1.4M | 10M | |||
| Fundraising goal | for software and hardware prototype development | development runway for the prototype to be production-ready | enter the market | scale business in Europe |
| Shares total | 1 000 000 | 1 200000 | 1 210 000 | 1 452 000 |
| Post-money valuation | 2M | 7M | 14M | 50M |
| Share value | 0.04 | 6 | 11.5 | 34 |
| Join time risk coefficient | 10 | 5 | 1.5 | 1 |
Assuming we are successful and do reach 100 employees after series A with initial option pool of 380 000 shares equity and do not print more shares, on average each employee gets ~ 3800 shares at 34 EUR per share valuation.