Splitting Equity Between Co-Founders

aaron chadbourne maine legal hero blogAnnie Webber, founder and CEO of Legal Hero, recently published a 2-part blog on splitting equity between co-founders. You can find the article at Legal Hero.

Starting a new business comes with a lot of excitement, little sleep, and a to-do list that seemingly never ends. Amidst the excitement, it is increasingly easy to avoid a difficult, yet necessary conversation about splitting equity between co-founders. While the topic is easy to postpone, you do not want to deal with the potential fallout and subsequent tougher conversation down the road.

Most assume that co-founders should split equity evenly. This is not necessarily flawed thinking, but there are plenty of reasons this argument does not hold up. Most co-founders divide equity equally for the following reasons:

  • Avoiding the awkward conversation, potential arguments, and parting ways.
  • Everyone is equal, so they all deserve an equal share.
  • An even split simplifies everything. Now they can focus more important things.
  • Co-founders want to make every important decision together.

These are honorable positions on the issue, but not exactly the most beneficial for the company. Running a business requires difficult, yet constructive conversations. Learning this early will be vital to your success. It is also important to understand that co-founders ultimately offer different skill sets. As Annie notes in her blog, “to suggest these skill sets and resources are equally valuable is a bit silly.”

Visit Legal Hero for further details on splitting equity, including a detailed framework to help resolve the issue.

Hampton Creek – Food Tech Startup

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Hampton Creek

A food tech startup, Hampton Creek, recently raised $90M in their Series C round from venture capital. The company that produces synthetic egg products has been peaking the interest of notable billionaire investors, such as Marc Benioff, President of Salesforce, and Eduardo Saverin, co-founder of Facebook.

Founder and CEO of Hampton Creek, Josh Tetrick, explains that more wealthy investors could have a future-focused outlook rather than less wealthy investors looking to make a quick return on their investment. Wealthy investors are trying to solve world problems rather than make a fast turn-around.

Food technology is a hot commodity for venture capitalists because of their potential to solve bigger problems in the future. Hampton Creek is providing their customers with a healthy, sustainable, and cost-effective alternative for replacing comparable nutrients in egg to other food products.

Not only is Hampton Creek making a big splash with wealthy investors and venture capitalists, but they are also catching the attention of food companies across the globe. Three different food companies have partnered with Hampton Creek, including one of the major food conglomerates in Asia, Uni-President. Other major investors in the company are Demis Hassabis and Mustafa Suleyman. These two are the co-founders of DeepMind Technologies, an artificial intelligence startup that was bought by Google for $400M.

Tetrick plans on using this seed round of investment capital on increasing their lab automation capabilities and developing a new process for their plant screening. Their products are already in 15,000 locations in Asia and the United States. They recently opened their new office in Singapore and hired a former Google employee, Christian Cadeo to lead their regional expansion in Asia.  They have plans on expanding their business to Western Europe in the near future.

Asia is a great place for the Hampton Creek product because of rising food safety concerns in the area. They’ve already had their eggless cookie dough and mayo flying off the shelves. Next they are working on their eggless scrambled eggs. I’m certainly interested to see how that one turns out.

Their eggless, plant-based products are considerably cheaper than your ordinary chicken egg: 48% cheaper. Their product is looking to create an affordable, healthy food product for the improvement of the food industry in the future.