In-depth examination of early contracting practices of founding teams
Subotic, Marjana
Subotic, Marjana
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Dissertation - Collection of articles
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Collewaert, Veroniek
Publication Year
2023
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Abstract
One of the earliest decisions founders are faced with is how to split the equity in their team. Assessing each founder’s past and future contributions is difficult to evaluate given both the venture’s and founders’ future is inherently uncertain. New competitors may arise and business models may change, potentially requiring a different skill set than those the founders possess. Founders may also lose their passion for the venture, encounter a new, more exciting opportunity, face health or family-related problems or may run into conflict with their co-founders, which might provoke their exit from the venture. The goal of the doctoral dissertation is to dive deeper into dynamic equity agreements and examine both their antecedents and consequences, while the question if inclusion of such provisions in the end would be good for the venture team and firm performance remains to be addressed. Apart from the crucial role of formal agreements among founders’ dynamics, early-stage growth will also be associated with differential role emergence among founding team members in terms of work specialization and differential allocation of responsibilities. For instance, during early stage growth, some founders will find themselves being more oriented towards stakeholder management, financial, marketing or human resource issues. Together, this doctoral study would not only contribute to the academic literature on the earliest decisions founders have to take related to their contracts and roles, but would also have important practical implications concerning what agreements founders are best of making from the outset of their ventures. Uncertainty regarding both founding team- and venture-specific factors may matter for our understanding of the adoption of dynamic equity agreements.
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Economics and Applied Economics