We’ve devised a new calculator to help you calculate how many shares to issue to employees, key players, basically, anyone who helps your business grow and succeed.
It’s a question we get asked every day. And the thing is, there’s no one right answer. Deciding how much equity to give is a commercial decision that will differ from business to business.
That said, the average amount companies tend to set aside for an employee option pool is 10-20% (excluding cofounders). But that’s not to say that within that everybody should receive the same number of shares.
Let’s say you allocate 10% to critical early hires, those who lay the foundations, like COOs, CTOs and CMOs.
And the remaining 10% is earmarked for future hires. Perhaps each new batch of recruits receives a different amount depending on when they join.
But tenure and seniority shouldn’t be the only measures for deciding who gets what. That’s why we created Agile Partnerships to help you devise flexible frameworks that release equity in line with people’s actual contributions.
How you choose to slice the pie ultimately is up to you. But when we can offer some guidance, we will. Cue the equity sharing calculator!
Introducing our new equity sharing calculator
Our equity sharing calculator is a free tool we’ve built to help you visualise company ownership and what each person’s stake could be worth in the future.
The first step is to input details of current shareholdings, including all the shares already in issue. Then, things get interesting. You can use our equity sharing calculator to allocate shares to specific groups:
- Key early hires
- Senior management
Before revealing what the final shareholding will look like in your ideal exit scenario, based on whatever exit valuation figure you put in. You can then download a CSV file of the results for free.
Should I give everyone in the team shares?
It’s common for founders to only issue shares to the C-suite rather than the whole team. But those founders are missing a trick. Numerous studies show that employees with skin in the game perform better than those who don’t. And that they’re financially better off.
When designed correctly, share and share option schemes can be a long-term incentive, which not only helps attract the best talent but also encourage employee retention. Providing there’s a vesting schedule in place and equity is released over time, subject to conditions.
How do I issue shares?
Allocating and issuing shares might sound like a monumental task. But there’s an easy way to manage equity, and that's digitally. That way, you’re not relying on spreadsheets, paperwork, lawyers and accountants, as is often the case. And costly.
Book a call with one of our equity consultants to see how Vestd can help you take care of all of this in one place. And don’t forget to give our equity calculator a go!