Equity Splitting for Startups

Commercial in Confidence. © 2014 Saasu Pty Ltd. All Rights Reserved.

!19th March 2014 !BY Marc Lehmann CEO, Saasu ceo@saasu.com @saasu @marclehmann

CEO INSIGHTS

Equity Splitting

About me

Disclaimer

General and Educational. !

These are take away ideas only, not advice. Your financial planner & accountant are your

advisors for your specific circumstances.

Methodology

This is just one of many methods. Different businesses suit different models.

!This is to help you clear blind-spots, seed ideas & inspire.

It also serves to break what is often a back of napkin approach by entrepreneurs at the critical start point.

What’s the experience of equity splitting?

Unfair

Incomplete

Unstructured

Legal paperwork

Changed contributions

Unaccounted contributions

Default elements in equity splitting?

IDEAS

💡

CASH

💵TIME⏲

Business equity is often split on a napkin !!!

Where do we start? A: Logic, then some maths

Value execution and focus skills

The officer at risk

Present value your future time and cash flows

Foregone salary opportunity cost

Benchmark your ideas to competitors IP value

Relationship & health pre-conditions

Personal brand wash applied to the business

Agree probability of cashflows

Value experience and youth

Starting point

CAPITAL💵

IDEAS💡

BRAND$

RISK⚠

COSTS&

Step 1: Break each component down

Step 2: Total of all the components

Step 3: Split the equity

CAPITAL💵

Equity Splitting Smarties Guide by Marc Lehmann

Initial capital

PersonalGuarantees

💵

☂

Future capital

- Opportunitycosts

Initial time invested⏲

BRAND$

RISK⚠

COSTS&

📰 Well known board members

Ideas Generated

© IntellectualProperty

🎯 Strategic Plans

*

+

✒

-

Founder Brand Wash

Pre-existing Visual Identity

Contact Networks

💍Relationship Complexity

🚪Doors already Opened

0

💰

🏦

⌖

4

Bank/debt Guarantee

Director

Liquidity Provider

CompanySecretary

PublicOfficer

Assets transfers

Freeresources

Vehicle usage

Office setup

🚘

Devices

Travel

📒 🏢

⚛

9

✈

DigitalAssets🔗

Company Formation<

Top 10 Tips 1. Value execution and focus skills. 2. Riskier roles are worth more equity. 3. Present value your cash valuations. 4. Foregone salary is an opportunity cost. 5. Model probability of valuation items. 6. Benchmark value IP/Ideas to competitors. 7. Any investor relationship or health issues? 8. Strong personal brands add value. 9. Future cash flow has risk, allow and agree on it. 10.Experience doesn’t always trump the value of youth.

=

>Mentors & advisors

Saasu Pty Limited ACN 093 453 886 http://creativecommons.org/licenses/by/4.0/

80% 20%Capital

IP

Brand

Risk

Costs

50

150

150

200

100

75

275

?

PPPatents pending

TMTrade marks

IDEAS💡

VALUE & SUM COMPONENTS (provided by each founder)