Essays/linkedin/24-02-06 misconception 2 equity split

🗽 Misconception 2: Equity in a startup should be split based on past contributions.

Once a #scipreneur decides to get started, there will almost certainly be a tense moment with faculty members: how much equity should a professor get?

While academia works on a system of rewards to past accomplishments, companies work on a system of future incentives.

If the people who actually start the company, the ones who work full time on it, don't get enough equity, they will inherently feel less ownership.

The lack of sense of ownership is devastating under a highly uncertain scenario.

People can become mere employees in a context without bosses.

And investors know this. If a startup's shareholders are mostly people who don't work at the startup, it leaves no room for creating an incentive structure.

And it also holds true when universities decide to hold equity in a company.

Professors need to learn to let their mentees grow.