Equity for scientists starting companies

<p>Splitting equity of a company can always give raise to eternal discussions. Science-based companies are a special case when they are the result of <a class="wikilink" href="/technology_transfer/">technology transfer</a> out of a University. Most likely there'll be some senior person (a professor, PI, etc.) who is not transitioning out of their position, but who still will receive a stake on the company. How much stake is deserved, however, is not clear upfront. </p> <p><a href="https://mattkrisiloff.com/">Matt Krisiloff</a> [<a class="litnote tooltip" href="/literature/@krisiloff2021">@krisiloff2021<span class="tooltiptext">Matt Krisiloff</span></a>] argues that a professor who will not switch to working on the company should receive less than 10% equity, and normally around 1 or 3%. I think this will depend on how much involvement the company required, and whether a low percentage is enough to create some incentives to keep engaged. </p> <p>I have discussed with a company that was offering around 1% equity to early scientific advisors as a way of keeping them in a close feedback loop that it would make them create value to the company, but not sure how this worked out for them. </p> <p>There is another important item regarding <a class="wikilink" href="/intellectual_property/">intellectual property</a>, since if a PI is the owner of a patent, for example, they'll receive some benefits even if they have no equity on the company. This is without even considering what happens if there is a <a class="wikilink" href="/maximum_of_shares_of_a_company_that_a_professor_can_have/">maximum of shares of a company that a professor can have</a>.</p>