Skip to main content

Reflection Notes from S353 Jan 17 Fitness Anywhere Case

· 2 min read
  • Typical equity split after 1st round in the Valley:

Confession of a Stanford Sloan Fellow Series EP40

VC 50% Options 30% Founders 20% Total 100%

  • Honestly, the VC numbers are shockingly high to me. In China I've never seen any startup after 1st round with such an equity split that favors VCs so much.

  • Typical equity split among founding team after 1st round in the Valley on average:

CEO 10% VP of Engineering 4% VP of Marketing 3% VP of Sale 1.5% Controller 1.0% 1 ~ 5 Engineer 1.0% each 5 ~ 10 Engineer 0.3% each Director of Marketing 0.5% Product Manager 0.2%

  • Michael asked a question about CFO. Lecturer's answer was straight: don't include CFO in your founding team, unless it's a hard-core financing business. Well, that's some encouraging news there.

  • Do not recruit close friends into your startup, especially the best-man on your wedding

  • Vest the stocks for new members you invite to join the founding team. Do not vest your own stocks (obviously).

  • Do not give part-timers more than 1.0% stock. Do not partner with someone that can only work part-time.

  • Get the free interns from business schools. Make them hot.

  • Use convertible bond (CB) for fund-raising. It's more effective and efficient than the traditional equity fund-raising.

  • Fill out Schedule C  (roles, responsibilities, deliverables, and timeline) of LLC's legal document in details to minimize founder's risks.

  • Why some founders appear to be very generous with distributing their stocks? - because when the company is small, they feel they have little to lose, so they don't really care. When the company gets bigger and its valuation gets higher, founder's mentality will change.

Buy me a coffee ☕