Step 5:

Ploughshare guiding principles
for founders

• Inventors who choose to be involved in the spin-out will have the option to receive founding equity. The starting equity position will depend on which pathway is chosen (see ‘The Spin-out pathways’ below)
• Ploughshare will hold no more than 24.99% equity in any spin-out and the remaining equity c. 75% will be made available for founders. How much every party gets depends on the spin-out pathway chosen
• Both Ploughshare and founder equity will dilute with investment. An additional pool of equity will be created (an option pool) that can be used to incentivise future and existing employees and management
• To be fair to everyone, the founding team will have to commit to the spin-out for a period of time and, if a founder leaves early, there are leaver terms linked to their equity dependent on the circumstances
• The IP will be licensed to the spin-out on an arm’s-length basis; this means the terms will be similar to those that an established company would typically get in a particular sector or market
• If an inventor chooses to remain full-time in their current employment rather than join the spin-out in any capacity, they will have access to the Rewards to Inventors (RTI) scheme (each government department’s scheme is slightly different, so the inventor would need to check on those terms).
• If an inventor chooses to join the spin-out part-time while remaining an employee of their government department, they will be able to take equity but this will be less than for those who join the spin-out full-time and conflicts of interests will need to be carefully managed.

These principles provide a starting point for determining the equity structure of the spin-out. The spin-out pathways below provide more detail on how that works in practice.