The investor is ready to give you money for a certain percentage of your startup. Agree? You are about to hire your first employee. How many shares can he promise?
This is one of those complex issues that confront the founders. But there is an answer:
Whatever you are going to exchange shares of your company, be it cash, or employees, or shares of another company - the formula is the same. You should change n percent of your company in the event that in the end you have the remaining (100 - n)% more than the company cost before the exchange.
For example, if ...