Equity in Startups

11 Pages Posted: 3 Nov 2017

See all articles by Hervé Lebret

Hervé Lebret

Ecole Polytechnique Fédérale de Lausanne

Date Written: September 1, 2017

Abstract

Startups have become in less than 50 years a major component of innovation and economic growth. An important feature of the startup phenomenon has been the wealth created through equity in startups to all stakeholders. These include the startup founders, the investors, and also the employees through the stock-option mechanism and universities through licenses of intellectual property. In the employee group, the allocation to important managers like the chief executive, vice-presidents and other officers, and independent board members is also analyzed. This report analyzes how equity was allocated in more than 400 startups, most of which had filed for an initial public offering. The author has the ambition of informing a general audience about best practice in equity split, in particular in Silicon Valley, the central place for startup innovation.

Keywords: entrepreneurship, founders, high-tech, innovation, Silicon Valley, start-ups, venture capital, academic entrepreneurship

JEL Classification: M13

Suggested Citation

Lebret, Hervé, Equity in Startups (September 1, 2017). Available at SSRN: https://ssrn.com/abstract=3063860 or http://dx.doi.org/10.2139/ssrn.3063860

Hervé Lebret (Contact Author)

Ecole Polytechnique Fédérale de Lausanne ( email )

INNO - VPIV
Quartier de L'innovation QI J1
Lausanne, CH-1015
Switzerland
+41216937054 (Phone)

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