What the fuck is founders equity?
Most first time entrepreneurs don’t know the difference between founders equity and normal equity. Founders equity sounds like a great thing - piggy back on the founders. It is a great thing if your company doesn’t take on many rounds of stock and goes public. However if you take a down round or get stuck with an unexitable comany - who do you think gets fucked first?
There is one major difference between founders equity (granted) and common stock (bought) and it has to do with taxes but since I hate accounting, I’ll leave it to your accountant.
Founders equity tends to end up in common stock add fully dilutable. Afterall, if the company doesn’t succeed it is the founders fault (though VC’s can also fuck up a company big time by being what I like to call “Herd VC’s” - or the type that hear something in the market and see other companies do it, therefore you must. Remember buy advertising, sell pet food at a loss, lose enough money to buy an island.
I would trade an island for pet food any day.
If anyone out there wants me to waste $50MM to start a pet food company, I will suggest buy an island and retire!
Anyway back to founders equity. All equity is good equity. However, The promise of founders equity is like the promise to be the first one in and the last one out. Not always so good. I’ll take my restricted shares with an anti-dilution clause any day! (anyone want to offer me a few?)
