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Equity for scientists starting companies

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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 technology transfer 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.

Matt Krisiloff [@krisiloff2021Matt Krisiloff] 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.

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.

There is another important item regarding intellectual property, 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 maximum of shares of a company that a professor can have.


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