Question: Our current plan is to set up a standard 4yr vesting + 1 yr cliff founder vesting cycle. Within this, we plan to split equity ~ 50/50 (with me having one additional share).
When setting this up, would you recommend we also allocate shares initially (20% for investors, 20% for employee options), OR would you recommend we distribute 50/50 first and issue more shares for investors + employees in the future?
Answer: No need to allocate any shares to investors pre-emptively. You'll allocate these when investors invest.
For the employee pool, I'd have as small of a pool as you can get away with. Why? Because if you issue the pool AFTER investors join the company, the investors will dilute as well by the expanded pool. Doing it prior just takes the pool out of the founders hide. I would allocate 3% now for employees you may hire in advance of raising from investors, and then expand after investors join.