Starting a Business – Who Gets What?

Many business start-ups struggle with how to allocate ownership percentages among founders.  Many just divide up 100% of the business by the number of founders.  This is not the correct way to do it.  Some people will contribute more of the intellectual property and others will leverage their expertise in executing the business plan.  So how do you decide who receives what percentage?

Frank Demmler, an Associate Teaching Professor of Entrepreneurship at Carnegie Mellon University, has an interesting paper on dividing the “pie” for entrepreneurs.  Click here to read it. 

Demmler’s premise is that people who take risk and perform high value activities should receive a higher percentage of ownership. 

Thanks to Rob Hyndman and The Business Opportunities Weblog for the tip.