TL;DR: A clean, common starting point is issuing about 50% to 80% of your authorized shares of common stock to the founders at incorporation. The rest stays authorized but unissued so you have room for an option pool, future founders, and other equity grants without immediately paying to amend your charter.
The baseline: issue 50% to 80% of authorized common at incorporation
When you incorporate, you pick a number of authorized shares in your certificate of incorporation. A practical rule of thumb is to issue roughly 50% to 80% of those authorized common shares to the initial founders right away.
Example: if you authorize 10,000,000 shares of common stock, you might issue 5,000,000 to 8,000,000 shares to founders at incorporation.
This gets founders properly “on cap table” from day one, while still leaving enough equity flexibility for what comes next.
When to stay closer to 50%
If you expect meaningful equity needs immediately after formation, you generally want more room left unissued.
You might stay closer to 50% issued if:
You plan to add an additional co-founder in the very near future.
You want a larger option pool early (for hires, advisors, or early team incentives).
You are trying to avoid reworking grants right after incorporation.
Why leaving authorized but unissued shares matters
Authorized but unissued shares are your built-in reserve. Keeping a reasonable reserve can reduce friction and cost later.
If you run out of authorized shares and need more, you can usually increase the number, but it is not free or instant.
Increasing authorized shares usually means a charter amendment
To increase authorized shares, the company typically needs the proper approvals (board and stockholders, depending on the circumstances) and then must file a certificate of amendment with the Secretary of State.
That filing involves:
Filing logistics
Filing fees
Legal time and transaction costs
None of this is catastrophic. It is just avoidable churn if you can plan your initial authorization and issuance sensibly.
Practical takeaway
Issuing 50% to 80% of authorized common stock to founders at incorporation is not about “saving shares.” It is about keeping enough flexibility that your next equity step does not force a charter amendment.
FAQs
How many shares should founders get at incorporation?
Often 50% to 80% of the authorized common stock, with the exact number depending on near-term equity needs like an option pool or an additional founder.
Why not issue 100% to founders and fix it later?
Because if you issue too much, you can end up needing a charter amendment to increase authorized shares sooner than you want, which adds time and cost.
If I need more authorized shares later, can I just increase them?
Usually yes, with the right approvals and a certificate of amendment filing, but expect filing fees and additional transaction work.
Ryan RobertsStartup Lawyer
Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration.
