Molson Hart

7. Eggs retain equity in what they have built up to that point.

Couple of questions: a. Seems like you're looking for more like entrepreneurial employees than founders to participate, right (3, 4)? Could be a small pool, usually you give up salary for control. b. Would the shares pay dividend or are they "exit only" shares?

c. Options or stocks? Look into taxation if you haven't, it's a pain. Very easy to create tax liabilities for employees and make it a disincentive. I can sum up what i know but not in 280 chars... d. Ideas would come from you or Eggs?

c. hmm...didn't think about that. Will awarding stock/options in a valueless company create tax liability? d. mutual agreement after conversation.

if you award it early on you can make it work. options are taxed upon sell (plus can trigger AMT on exercise) stocks are taxed upon vesting and sale, but sometimes you can fast forward taxation upon grant (when the company is valueless). there are conditions thuogh

basically it's ok if the employee comes in super early or late, it sucks between series B/C/D... and IPO

Yeah, makes sense. I'm sure there's some way to address this and correct me if I'm wrong, but that's a problem for all incubators - not just this model?

there are ideal ways for founders (issue stocks upon founding), but AFAIK no perfect way exists for the middle part i mentioned. not sure if that applies to your case. and yes it affects all startups.