Understanding the fundamentals of equity is essential for a founder. And for those who have never handled it before, this versatile corporate tool can be a little intimidating.
Matt Howland's article provides a complete and didactic overview and deserves its place in our selection.
He presents what a Cap Table is, the different types of equities, company valuation, option grants, strike price, stock options, vesting period and option pool.
A good first reading on the subject.
Understanding and managing equity can be confusing, but as a founder, it’s essential to take the time to learn equity basics. Getting equity right ensures:
- Your employees are motivated to do their best work and stick around
- You get the best possible investors and term sheets
- You as a founder retain a meaningful portion of what you’re building
- You avoid legal trouble