How does the startup equity calculator work? To turn an ambitious startup idea into a well-established and authentic company, the basic requirements for any startup team primarily include two things, i.e., the money and the advice from various successful and experienced entrepreneurs. Along with the guidance and funding, while looking for a technical co-founder, you also need an all-star team that will help you build up your company. But in exchange for their services and talents, you need to provide them with equity, and the distribution of this equity among the various sections of your company is not an intuitive process. In this article, we teach you about the startup equity calculator while teaching you the basis of distributing the equity correctly among the various sections of your company. What do you mean by the equity in a startup company? The equity in a startup company is generally defined as the percentage of its shares sold out to its investors. As a result, the investors will not only be provided with the company's ownership. Still, they will also be benefitted from their rights to the potential profits of that startup company. The equity in a startup is generally distributed among its investors in stocks. As a startup gradually succeeds, its subsequent investors will be much more interested in funding more per share in the upcoming rounds of their funding. This factor is one of the essential keys that keep startups motivated to grow. Who is eligible to get the equity of a startup company? Generally, there are 4 different sections in a company that are eligible to get equity in a startup company, and they are as follows: ● ● ● ●
Its investors. Mentors or advisors. Employees. Technical co-founders.