Startup lawyer

Splitting the equity, the decision that cannot be undone

Almost every dispute in a technology company traces back to a fifteen-minute conversation in which the equity was split equally to avoid an argument. Splitting it well means looking at what each person contributes over time, not on the day of signing: time, money, technology, network. And it means making that split conditional on the contribution actually happening.

Founder commitment

The mechanism that solves this is vesting: whoever leaves early keeps the share proportional to the time they stayed, not the whole package. A founder who walks away after eight months holding twenty-five per cent of the company is the most common reason a later round fails to close.

The intellectual property has to sit inside the company

Code, brand, designs and research results are often born in the name of an individual, or of the university, or of an outside consultancy. If that is not formally assigned to the company, it does not belong to it. It is one of the first things examined in pre-round due diligence, and when it is missing the closing slips by weeks.

Rewarding the team without giving away equity

Share options, treasury shares, or synthetic units known as phantom shares, which give an economic right without a vote or shareholder status. Each formula carries a different tax and corporate treatment and a different practical difficulty inside a Spanish limited company, which was not designed for this. Choose before you promise anything in writing.

What the Spanish Startup Act does and does not give you

Law 28/2022 on the promotion of the emerging company ecosystem brought real improvements: a reduced corporate income tax rate in the first years, better treatment of options granted to employees, and a more workable regime for people relocating to Spain to work. It is not automatic: it requires certification as an emerging company and compliance with requirements on age, independence and activity. It is worth checking whether you fit before assuming you do.

The round

Before the capital increase there is usually a bridging instrument: a convertible note or a simple agreement converting into future equity. What is signed there shapes every subsequent round, because it fixes the discount, the valuation cap and, very often, who actually decides. Read it translated into numbers: what percentage you keep in each scenario.

Science-based companies

In biotech and health there are layers that do not exist in software: patent licences with the university or research centre, material and technology transfer agreements, collaboration agreements with hospitals, and sector regulation that shapes the business plan itself. It is ground we know closely and that is worth structuring from the start.