What’s the best way to distribute company equity?

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Sizing Option Pools In Connection With Financings – AVC

Here’s a formula I like to use. Take the cumulative salaries of all the hires you need to make betwen the current financing and the next one. Let’s say it is five employees at an average of $75,000. Then that number is $375,000. Then divide that number by the post-money valuation, in this case $5mm. That gives you 7.5%. That’s the size of the option pool you’ll need. And it is conservative because I don’t recommend giving options equal to the dol… (read more)