Direct ownership stakes for startup originators
Founder equity is the percentage of a company's shares held by its founders. At incorporation, founders typically issue themselves ordinary shares (sometimes called common shares) at nominal value, for example EUR 0.01 or GBP 0.01 per share. This gives each founder legal ownership and voting rights from day one, before any equity split dilutes further.
Unlike employee stock options, founder shares are usually issued outright rather than granted as a right to buy later. Founders pay for their shares immediately, even if the price is nominal, which starts the clock on capital gains treatment in most countries.
Equity.me does not provide legal or tax advice. Always confirm structuring with a local lawyer or accountant before incorporating.
Ownership reduction across successive funding stages
Founder ownership percentage falls every time the company issues new shares, whether to investors, employees, or advisors. This is dilution: the founder's share count stays the same but the total share count grows, so each share represents a smaller slice of the company.
| Stage | New shares issued for | Typical founder dilution |
|---|---|---|
| Incorporation | Founder shares only | 0% |
| Option pool creation | Employee option pool (10% to 15%) | 10% to 15% |
| Seed round | New investor shares | 15% to 25% |
| Series A | New investor shares | 15% to 20% |
A founder who starts with 100% of a two-person split and goes through a pool top-up, seed, and Series A round often ends up owning somewhere between 40% and 60% of the company by Series A, depending on round size and pool top-ups.
Contractual safeguards in shareholders agreements
A shareholders' agreement typically sits alongside the articles of association and covers vesting, leaver provisions, drag-along and tag-along rights, and pre-emption on new share issuances. Without vesting, a founder who leaves early keeps their full stake, which can be unfair to those who stay and build the company.
- Vesting schedule with a cliff, tied to continued involvement
- Leaver provisions distinguishing good leavers from bad leavers
- Pre-emption rights so existing shareholders can maintain their percentage in future rounds
- Drag-along rights so a majority can force a sale on all shareholders
Questions founders ask about their own shares
- Do founders need to pay for their shares?
- Yes, in most European jurisdictions founders must pay at least nominal value for their shares, even if that is a very small amount such as EUR 0.01 per share.
- What percentage should a solo founder keep?
- A solo founder typically starts with 100% before any option pool or investment, then dilutes as the company raises capital and hires.
- Can founder equity be taken back?
- Only if a vesting schedule and shareholders' agreement give the company or other founders a right to repurchase unvested shares when someone leaves.
General information for founders, not legal or tax advice. Thresholds and rates change, so confirm the current position with an adviser in the relevant country before granting.