Who are considered the owners of the company besides founders?

The owners usually are comprised not only of the founders, people who contributed financial or intellectual capital, but also frequently of key management personnel that are identified as being necessary for the success of the venture. Some people refer to them as the “five C’s” (CEO, CMO, COO, CTO and CFO).

 

The CEO – chief executive officer

The CMO – chief marketing officer

The COO  - chief operations officer

The CTO – chief technology officer

The CFO – chief financial officer

 

Although not required, it is common for the five C’s to receive some level of stock rights in connection with their commitment and service to the start-up. Some or all of the roles of the five C’s can be filled by founders, provided founders have necessary skills and talents. Otherwise, it may be better for the business to bring more experienced or educated professionals in a particular field from outside. Imagine a situation when a founder is extremely talented IT engineer, developed an outstanding product, but knows nothing about marketing, business development, and sales? Or he loves what he does in a laboratory and has no interest or desire to go out and socialize with strangers to improve sales? How soon do you think the business will pick up? Not even to mention the possible competitors on the market …

 

Owners of the company can also be other key employees when it is desirable to incentivize them to stay and perform or to reward for loyalty and service already given. Once all owners are identified, the next step is to decide how much of a percentage interest they should receive and in what form that interest will be granted. There is no legal or any other requirement concerning this matter. There may be some industry standards, which may be used as solely as guidance (to get an idea if you are knew to the market), but generally it is open to a discussion between two market participants.

 

Once there is an understanding of how the percentages of ownership should be aligned, then various elements of the company management, owners’ rights and responsibilities, exit strategies, warranties and other matters, which may affect business operations should be considered and agreed upon. At this stage you need assistance of an experienced business lawyer.

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